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Agenda Item - 2019-05-21 (02) 503.635.0215 380 A Avenue PO BOX 369 Lake Oswego, OR 97034 www.ci.oswego.or.us Subject: Request to Amend the Disposition and Development Agreement and Use Covenant of Block 138 to Expand Uses for Ground Floor Retail on State Street Meeting Date: May 21, 2019 Staff Member: Sidaro Sin, Redevelopment Manager Department: Lake Oswego Redevelopment Agency Action Required Advisory Board/Commission Recommendation ☒ Motion ☐ Approval ☐ Public Hearing ☐ Denial ☐ Ordinance ☐ None Forwarded ☐ Resolution ☒ Not Applicable ☐ Information Only Comments: ☐ Council Direction ☐ Consent Agenda Staff Recommendation: Authorize the Executive Director to execute a second amendment to the April 17, 2001 Disposition and Development Agreement and Use Covenant of Block 138. Recommended Language for Motion: Move to authorize the Executive Director to execute a second amendment to the April 17, 2001 Disposition and Development Agreement and Use Covenant of Block 138 to allow fitness, health and beauty services, financial institutions, health care, office and real estate services on the ground floor along State Street for a portion of Building B and all of Building C. Project / Issue Relates To: ☐Council Goals/Priorities ☒Adopted Master Plan(s) ☐Not Applicable ISSUE BEFORE THE BOARD Shall the LORA Board allow expanded uses on the ground floor along State Street in the Lake View Village mixed use development? Leasing retail space along State Street has been challenging since the mixed-use development first opened in 2003. Leases are expiring for some of the tenants and Gramor Development seeks to expand the uses allowed in these spaces to meet the demand of the changing retail industry and to provide additional consumer options. Under the existing Use Covenant, these uses are restricted to retail, hotel or 13.2 Page 2 503.635.0215 380 A Avenue PO BOX 369 Lake Oswego, OR 97034 www.ci.oswego.or.us restaurant uses. The expanded allowed uses would include health, financial and office related uses. EXECUTIVE SUMMARY Gramor Development, the owner of Lake View Village is requesting to expand the uses in the development on the ground floor along State Street. Currently, the Use Covenant limits the uses to retail, hotel and restaurant uses. Expanded uses would include fitness, health and beauty services, financial institutions, health care, office and real estate services. Retaining tenants on the ground floor along State Street has been challenging since the development first opened in 2003 and will continue to be challenging as e-commerce continues to grow. The request seeks to provide uses that still provide for active pedestrian traffic on the ground floor such as service businesses and uses that have a lower risk of exposure to technology disruptors. BACKGROUND In 2001, the Lake Oswego Redevelopment Agency (LORA) entered into a Disposition and Development Agreement for Block 138 (DDA) with Gramor Development for the development known as Lake View Village. The development is a key component of the urban design plan for a compact shopping district along First Street. Millennium Plaza Park, Lake View Village and the Windward anchor the southern part of this shopping district, while the north end of First Street will be anchored by another quality mixed use development. In order to attract people and create an active downtown, the DDA stipulated that all ground floor retail of the development be limited to retail, hotel or restaurant uses. A Use Covenant was placed on the property to ensure this requirement lasted in perpetuity. DISCUSSION On May 6, LORA received a request from Gramor Development to amend the Development Agreement and Use Covenant to allow fitness, health and beauty services, financial institutions, health care, office and real estate services on the ground floor along State Street for a portion of Building B and all of Building C (Attachment 1, Exhibit B). The request cites significant changes in the retail industry such as e-commerce, healthier lifestyles and consumer convenience. The owner seeks to provide uses that still provide for pedestrian traffic on the ground floor such as retail and service businesses, but also uses that have a lower risk of exposure to technology disruptors. This is not the first time the owner has requested to expand the uses. In 2015 the LORA Board approved a request to allow a real estate office on the southernmost tenant space of Building C. At the time, the owner cited difficulty in retaining tenants due to the proximity to State Street, narrow sidewalks and access to underground parking as reasons for the request. Those same challenges still exist today. Additionally, it is worth noting that the Board also recently approved similar uses for the Windward development along the ground floor of A Avenue. That request cited a challenging retail market with an increase in e-commerce and physical challenges with the site as the reasons for the request. Page 3 503.635.0215 380 A Avenue PO BOX 369 Lake Oswego, OR 97034 www.ci.oswego.or.us The downtown has evolved significantly since Lake View Village was first developed and it will continue to do so with new mixed-use developments such as the Beacon (3rd St. and B Ave.) and the North Anchor Project (1st St. and B Ave.) Considering the downtown as a whole, allowing expanded uses that are amenities for the community would not significantly impact the district’s overall goal of economic vitality and a vibrant pedestrian-friendly downtown. RECOMMENDATION Staff recommends the LORA Board authorize the Executive Director to execute a second amendment to the April 17, 2001 Agreement for the Disposition and Development Agreement and Use Covenant of Block 138. ATTACHMENTS 1. Request from Gramor Development to modify the Disposition and Development Agreement and Use Covenant of Block 138 (May 6, 2019) ATTACHMENT 1