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Agenda Item - 2021-10-05 - Number 15.1 - Twelfth Amendment to the Block 137 Agreement 15.1 E 4� REDEVELOPMENT AGENCY REPORT (0.4rt r o OREGO\- Subject: Twelfth Amendment to the Block 137 Project Development Agreement Meeting Date: October 5, 2021 Staff Member: Sidaro Sin, Redevelopment Manager Department: Redevelopment Agency Action Required Advisory Board/Commission Recommendation ❑X Motion ❑ Approval ❑ Public Hearing ❑ Denial ❑ Ordinance ❑ None Forwarded ❑ Resolution ❑X Not Applicable ❑ Information Only Comments: ❑ Council Direction ❑ Consent Agenda Staff Recommendation: Approve the twelfth amendment to the August 13, 2013 Block 137 Project Development Agreement and Declaration of Use Covenant. Recommended Language for Motion: Move to authorize the Executive Director to execute the twelfth amendment to the August 13, 2013 Block 137 Project Development Agreement and Declaration of Use Covenant to allow financial institutions, real estate firms, art galleries, offices, medical and dental offices, health and beauty, wellness and fitness, instructional art and craft studio uses for space A5 in Building A of the Windward development. Project/ Issue Relates To: ❑Council Goals/Priorities ❑X Adopted Master Plan(s) ❑Not Applicable EXECUTIVE SUMMARY Wizer Properties LLC is requesting to amend the Declaration of Use Covenant to allow financial institutions, real estate firms, art galleries, offices, medical and dental offices, health and beauty, wellness and fitness, instructional art and craft studio uses for space A5 of the Windward development. The LORA Board approved two previous amendments to allow such 503.635.0215 380 A Avenue PO BOX 369 Lake Oswego, OR 97034 www.ci.oswego.or.us Page 2 uses in abutting spaces A1-A4. The original agreement for this development limited the uses on the ground floor along A Avenue and First Street to retail sales and food and beverage services. Approving the amendment would allow a high-end hair salon to occupy the space. The uses proposed are consistent with the redevelopment district's overall goal of creating economic vitality and a vibrant downtown. Staff would recommend approving the amendment. BACKGROUND The 2013 Development Agreement for Block 137 between the Lake Oswego Redevelopment Agency (LORA) and the Evergreen Group LLC (Evergreen) provided the legal framework for developing Block 137, now known as the Windward. In 2019, ownership of the retail component of the Windward was transferred to Wizer Properties LLC (Wizer). In 2020 the rest of the development was transferred to Security Properties Group (SPC). A goal of the project was to have active commercial uses that would attract people to the downtown, including evenings, weekends and holidays. This, along with design objectives, providing for public parking spaces and a publically accessible pathway was the basis for LORA to financially participate in the development. To provide for active uses, and to avoid offices and other ground floor uses that close on evenings and weekends, the development agreement specifically required the ground floor of the project on the A Avenue and First Street block faces be limited to retail sales and food and beverage services. A use covenant was recorded on the property to ensure this requirement lasted in perpetuity. Although the development agreement that included all three buildings in the Windward development was terminated after the project was completed, SPC owns residential spaces above and commercial spaces abutting the retail spaces along A Ave and First Street and therefore has an interest in the uses that may affect their investment. Since Evergreen no longer has ownership in the property, it is the City's opinion that both SPC and Wizer should participate in signing the development agreement and use covenant amendments. In December 2018, at the request of Evergreen, the Board approved expanding the uses to spaces A1-A4 along A Avenue to include financial institutions, real estate firms, art galleries, offices, medical and dental offices, health and beauty, wellness and fitness uses. Evergreen cited difficulties in the limited uses permitted, grade changes and the shift in the nature of retail market towards e-commerce as the need for expanding the uses. In 2019, at the request of Wizer, the Board expanded the uses again to allow instructional art and craft studio uses for the same retail spaces in order to accommodate an art studio tenant. As of today, all four of these spaces are leased. DISCUSSION In August 2021, LORA received a request from Wizer to amend the Declaration of Use Covenant to allow financial institutions, real estate firms, art galleries, offices, medical and dental offices, health and beauty, wellness and fitness, instructional art and craft studio uses for space A5 along A Avenue (136 A Ave) in Building "A" of the Windward development (Attachment 1— Request and Attachment 2 - Site Plan). This request would allow space A5 to have the same 503.635.0215 380 A Avenue PO BOX 369 Lake Oswego, OR 97034 www.ci.oswego.or.us Page 3 uses as retail spaces A1-A4. Space A5 was not included in the two previous use amendment requested, however, after being vacant for the last three years, the request is now being made because there is interest from Citrus Salon, a high-end hair salon to occupy the space. Citrus Salon is a woman-owned business with a mission of being "rooted in the community." Their first store was founded in 2009 in Martinez, California and this would be their second store. The salon has also made the list of the "Top 200 Salons" in North America by Salon Today Magazine in 2017, 2018, 2019 and 2020. Mrs. Wizer indicates the space has been challenging to lease for the last three years because it does not provide for much outdoor dining space that a restaurant would typically want and it is larger than most boutique retailer would want. COVID has also made leasing retail space more challenging. Considering the downtown as a whole, amending the development agreement to allow the expanded use would not significantly impact the district's overall goal of creating economic vitality and a vibrant downtown. RECOMMENDATION Approve the twelfth amendment to the August 13, 2013 Block 137 Project Development Agreement and Declaration of Use Covenant. ATTACHMENTS 1. Request from Wizer Properties LLC to amend the Block 137 Project Development Agreement and Use Covenant 2. Windward Development Site Plan 503.635.0215 380 A Avenue PO BOX 369 Lake Oswego, OR 97034 www.ci.oswego.or.us ATTACHMENT 1 Wizer Properties LLC 269 A Avenue, Lake Oswego, OR 97034 Phone: 503.459.7505 August 4, 2021 Lake Oswego Redevelopment Agency (LORA) Attention: Ms. Martha Bennett, LORA Executive Director 380 A Avenue Lake Oswego, OR 97034 Sent via email: mbennett@lakeoswego.city RE: Use approval for space "A5" (136 A Avenue) at The Windward (Block 137), Lake Oswego, OR Dear Ms. Bennett, Wizer Properties LLC, the owner of the Retail Unit (the tenants facing First Street and A Avenue) of The Windward, hereby requests approval for space "A5" at The Windward,with a physical address of 136 A Avenue, Lake Oswego, OR 97034, to have the same approved uses that were granted and recorded for spaces "Al through A4" on March 7, 2019, "The Amendment to Declaration of Use Covenants", and as approved at the July 16, 2019 LORA meeting. Background At the December 4, 2018 LORA meeting, LORA unanimously approved to expand the usage for spaces known as retail Al through A4 in Building"A" at The Windward. Use was previously restricted to retail and restaurant use only. The approved, expanded usage allows for"financial institutions, real estate firms, art galleries, offices, medical and dental offices, health and beauty,wellness, and fitness uses". At the July 16, 2019 LORA meeting, LORA unanimously approved to expand the usage for spaces known as retail Al through A4 to also include an educational art studio for children and adults with classes and related events. The request to include the additional uses for space "A5" was not allowed. AS has been a challenging space to rent solely for the purpose of restaurant or retail use. The space has been empty for over 3 years. There is very limited outside dining space for a restaurant use,which is even more important now due to COVID. Additionally, most food and beverage operators are focused more towards 1 First Street. Also, it has been a challenge to lease to pure retail given that this is a bigger space,which can be too much for a small, boutique retailer. Opportunity Given the challenges with trying to lease space A5 for over 3 years, expanding the use for A5 provides us with more opportunities to lease the space versus having an empty, inactive space. We now have an opportunity to lease A5 to a high-end hair salon. A high-end hair salon is an active use that will bring people downtown who may also patronize other downtown businesses before or after their appointment.We believe the proposed tenant will be an excellent addition and complement to downtown Lake Oswego. Tenant Background and Use The following are some details for the potential tenant for A5. Potential tenant: Citrus Salon (httus://www.citrus-salon.com/) Use: A high-end hair salon and related retail products Tenant background: High-end hair salon Business mission: "Rooted in Community" Woman owned business Founded in 2009 in Martinez, CA Lake Oswego will be a 2nd location "Top 200 Salons" in North America by Salon Today Magazine in 2017, 2018, 2019, and 2020 The salon manager for this new location has family in Lake Oswego Current Retail Unit Leasing Status The Retail Unit of The Windward is currently at 77% leased of the total 29,525 square feet. There are 2 spaces remaining on First Street and 2 spaces remaining on A Avenue for long term leasing. We are currently working on a Letter of Intent (LOI) for 1 space on First Street. We were previously at lease for the 2 spaces on First Street, but were unable to move forward with that tenant due to COVID. Commercial Realty Advisors (CRA) is our broker for leasing. Request We request the approval of the additional uses, as previously approved for spaces Al through A4, for A5 in order to move forward with leasing opportunities for this 2 space.A lot has changed due to COVID and we need to consider all tenants who could be a fit, contribute to an active downtown, and have the financial backing to succeed. Our goal continues to be to lease to quality tenants who have an "active use" and will be a draw to the downtown core of Lake Oswego. We appreciate your review and timely response. If you have any questions or would like to discuss this further, please call me at 503-459-7505. Thank you, i Ater* 19 11{1/,( -- Kim Wizer Manager Wizer Properties LLC cc: Mr. Sidaro Sin, Development Project Manager Via email: ssin@ci.oswego.or.us Enclosures Amendment to Declarations of Use Covenants 3 ATTACHMENT 2 GROUND LEVEL SITE PLAN I \7f THE WINDWARD VENTABLE FOR RESTAURANT USE RETAIL/SERVICE/OFFICE USE (NO RESTAURANT) USE SECOND STREET RTA(NO RESTAUU RANT)RANT) ENTRANCE 7 Ex x x� / S II RESIDENTIAL AREA ,, IC. ., \------.... 7) ‘k, 11) (.... ) (..' C, � ;_� ' _ b I L= # —=———1 k ----Ill*" a''—' IT i - . r -"\ • . _....41__ c 'w 4 ElnI inv. A k _ I T I _ ' thLAst p LOUNGE STRETCH RETAIL AI 2,385 SF Usable 7 S :. r ,P A B I 2,883 SF Leasable 1 Vii illi _Er D s - o — t, 4 El / --- , I ` aIC ■ \ I� it �rl l\ NUM II � I J ill � 1 — y i-.:TEILI / immi ' \ — I ILIBiny ❑ _ \ [ c ({ iiiiri. NunRngtrn I I /J , _ — = 1., ❑ ._ 0 ] .- -1 . I I Ike. --IV---- — L_*__#______ O ❑ , ,,.• �Drawn2Art �,, - -414 .. [r1 lk rip d. CI 1 ' r„ -,''''t .`271,'..T.I!'" rm 0 1 ;_ z �►'� x _,:, I 1 xa OW L,• a• 6;'- I m e m now11-GPIASe W ❑ ■ —- IWO.� �!— �i ! RETAIL A5 y i„}—�CIAL qxG. 2 LLICe�- �1�� _ I ❑ I, ,,�, ❑ 2:_=.I ill wwww.w www- 1,956 SF Usable �� 11/ VI 11 ie6_.4,. (,cc/,, C 2,342 SF Leasable o — ❑ i 8 FAIRWAY ❑� ]II� I� I�' iiiiiiiii�iiiviiiii _• SHAFT � n Q W\' 16° .,.,r.G. ❑ .t ❑«6..G• ❑ ❑ I II ��T I < GGGsx ❑ II Y �L�oi ELF � r 41 1 ' r ___ul IF 11 1 I o en ii RAL MAU. A x Glx �� — xlxG nx BUILDING ; �_ _ Gexe . _ r 11-- +II'°'w��-iI _-Le)) I _,.,4 e„«. 1 II —11-7''�-ram 'L.i,,...!1 . . IIf'x... ,,,1 it Ex�.rxE' I - II 11 'x ExD E ❑ I F. ❑ «ss.e ❑ ° «.v.e y J weeous .14 ilpEoEscium emu.— II JI� • TOWER PLASTIC'S ''.1.''. \ 11111i� `❑ r ,wuxcwRAGE.• A F ,, 11 �. � I to r DOMAINE SERENE I = 1 -- I\ o ❑ n R n n se,xD n e ❑ — D�IIHOOD BREAKSIDE :I 111 I ° sxnn O° 1 f DISHWASHER —1 — • ❑swn --.BREW ERY� ..2 MIAUST SHAFT 0 t II u L4 � e I ,eEPOS. M. HOOD e . POSSITNGD'EPENDINGl�Q. Ef 'Ir _ x� _ VENTING TNEEDS BE 4I -gmRETAILC3 °`o°' BRMB00� . POSSIBLE.2.30 GREASE K I 2,000 SF Usable RETAIL C4 DINING meoie aeiedeme passible INTERCEPTOR III I� vvyy 1,794 SF Usable ADORN• :�,,,,,aoDo I\ ° ❑ ❑ "1��1,324 SF Leasable: o ° ❑ S11LT�}'STRiIW _�N COMMERCIAL PARKING 1 I x 2,087 SF Leasable u ❑ DSHWASHER""" ❑ m •- ❑ Ski •iAx b PATO DINING EXHAUST SHAFT • I pxwG ® GA •'- «%6 N33 6 Mi0'6 • r/3<V •,I:1 , I •/(-0 «33 6 _J TI ID ElPOSSIBLE GE.0 GREASE RADE IN COMMERCLAL GENERAL SHAFT INTERCEPTOR DOWN IMBRCEPTOR BELOW POSSIBLE 16. CAN BE COMBINED /ro>x xG OSSIBLE e GE °s • FOR 4 411 SF_.. . a.exau>Mx NG TO PARKING GARAGE BELOW ENTRANCE � ��" O `° Ir ❑ ) x ❑ PUBLIC PARKING Q.QIxGmxE FIRST STREET lil rio- A The information contained herein has been obtained from sources Commercial Realty Advisors NW LLC deems reliable.We have no reason to doubt its accuracy,but Commercial Realty Advisors NW LLC does not guarantee the information.The prospective buyer or tenant should carefully verify all information obtained herein. UPDATED 9/2019