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Agenda Item - 2022-11-15 - Number 04.2 - Approval of LORA Meeting Minutes 4.2 of 0,p REDEVELOPMENT AGENCY REPORT rro v -a+ Subject: Approval of Lake Oswego Redevelopment Agency Board Meeting Minutes Meeting Date: November 15, 2022 Staff Member: Kari Linder, Recording Secretary Report Date: November 3, 2022 Department: City Manager's Office Action Required Advisory Board/Commission Recommendation 0 Motion ❑ Approval ❑ Public Hearing ❑ Denial ❑ Ordinance ❑ None Forwarded ❑ Resolution ❑X Not Applicable ❑ Information Only Comments: ❑ Board Direction ❑ Consent Agenda Staff Recommendation: Approve minutes as written. Recommended Language for Motion: Move to approve minutes as written. Project/ Issue Relates To: Issue before Board (Highlight Policy Question): ❑Council Goals/Priorities ❑Adopted Master Plan(s) ❑X Not Applicable ATTACHMENTS 1. July 19, 2022, Draft Regular LORA Meeting Minutes Respect. Excellence. Trust. Service. 503-635-0215 380 A AVENUE PO BOX 369 LAKE OSWEGO,OR 97034 WWW.LAKEOSWEGO.CITY ATTACHMENT 1 LAKE OSWEGO REDEVELOPMENT AGENCY MEETING rrA MINUTES V July 19, 2022 aREGO� 13. CALL TO ORDER, REDEVELOPMENT AGENCY (LORA) Chair Buck called the Lake Oswego Redevelopment Agency (LORA) meeting to order at 5:23 p.m. on July 19, 2022. Present: Chair Buck and Board Members Manz, Wendland, Nguyen, and Rapf. Board Members Verdick and Mboup were excused. Staff Present: Martha Bennett, Executive Director; Jason Loos, LORA Counsel; Sidaro Sin, Redevelopment Manager; Kari Linder, Recording Secretary Others Present: Sarah Zahn, UD+P; Boyce Postma, Hacker Architects 14. BOARD BUSINESS 14.1 North Anchor Project Update Mr. Sin introduced Ms. Zahn, chief operating officer for the project developer, UD+P, and Mr. Postma, architect with Hacker. Recognizing the Board's priority of keeping the project on track, he indicated that much has been accomplished by the team and by staff since December. Despite challenges, notably financial, significant progress would be shared with the Board. Ms. Zahn noted the presentation would provide an overview of the past and upcoming six-month periods. Mr. Postma, lead designer for the hotel and also closely involved with the residential project, would be available to assist. The team regards the community as a desirable place for development and continues to be enthusiastic and committed to the project. Displaying slides (Presentation — North Anchor Project Update), Ms. Zahn reminded the Board that a key aspect is creating a name and identity for the hotel, since it will not be flagged as a national brand. Beginning with design updates, she reviewed a pricing exercise undertaken in recent months to identify cost-saving opportunities. Only one significant design change to the multi-family residential portion would be apparent: relocation of the entrance (Presentation p 4-5/32). The hotel, being managed on a track separate from the multi-family, also reflects design changes (p 7-8/32) and is now entering a final stage of design. She reviewed significant changes to the north and west elevations, including related positive effects; an additional design review process is not anticipated at this point. Next, renderings showing aspects of the hotel were described (p 9- 12/32), including the meeting room, some proposed materials, and functionality of the building as a whole. The branding and restaurant concepts have been advanced with significant help from a local design firm, including outreach to people about current community highlights and needs for Redevelopment Agency Meeting Minutes Page 1 of 4 July 19, 2022 consideration. The hotel's name should be finalized shortly. Foundations for the brand were detailed (p 14-18/32), with attributes including warmth, magnetism, and radiance. Considerable analysis has been done to identify characteristics of likely guests (p 20). The efforts had culminated in a guiding statement: "Light the Way". This recognizes the five months of the year that are dark in the Pacific Northwest, yet where light and warmth are sought in the beauty of outdoors. This has guided the design and will be reflected in the hotel name and other brand components, she indicated. A similar process was followed for the restaurant. Significantly, it was found that the restaurant must be embraced by the community; an 83-room hotel alone cannot support a 100-seat restaurant. An overview and creative concepts were highlighted, including the need to distinguish it as a Lake Oswego, not Portland, restaurant (p 23-24). Photographs of four "comparables" for purposes of inspiration were then shown (p 25-28). Board Member Rapf cited erroneous assumptions made by businesses coming into Lake Oswego from elsewhere. Having found that residents generally seek an unpretentious setting and service, various businesses have either retooled or failed. As presented by Ms. Zahn, concepts for this project reflect a good understanding of the community, he opined. The challenge will be to operate the business in a way that recognizes what Lake Oswego is and what is not. In response to Board Member Wendland's questions, Ms. Zahn indicated that announcement of the hotel's name and concept is probable within the coming two to three months, with possible phasing-in of some aspects. The name, at least, would be unveiled prior to the start of construction. Member Wendland emphasized the community's high level of demand for the hotel, the sooner the better. Ms. Zahn next discussed the environment in the capital markets, with interest rates increasing. Even a greater factor for developers has been escalating construction cost, together with supply- chain unpredictability. A dramatic drop in the volume of real estate transactions has been seen; lenders, underwriters, and investors are in essentially wait-it-out mode. Developers are waiting and watching before moving forward to initiate a construction loan, seeking an equity investor or selling an asset. For many reasons, it is a time of great uncertainty and challenge. Specific to this project, it has been capitalized sufficiently to break ground, and UD+P is currently looking for additional investment capital. They are seeing interest in the project by many of their lenders and investors, but are being asked to provide updated cost numbers from the contractor. Their focus now is on budget revisions that reflect the contractor's changes and the reworked plans from Hacker. These are anticipated within the next four to six weeks, after which the investment search will proceed aggressively. Despite the hesitancy in capital markets, the team remains confident that the project will go forward; it simply has slowed down slightly. Finally, she reviewed the project schedules. While the multi-family is running somewhat ahead of the hotel at this point, the plan continues to call for coordination of staging in terms of construction; concurrent work on the two projects allows for cost savings. However, much depends on how the capital comes together. The multi-family and hotel schedules were discussed (p 31-32), with indications being that the hotel will lag the multi-family project by one to two months. She reiterated the caveat of capital as a major determinant of timeline, and its priority in the next quarter. Chair Buck inquired about the estimated length of the construction period. Ms. Zahn and Mr. Postma concurred that it would be about 18 months, with completion probable in summer 2024. Member Wendland commended the team for recognizing the priority of a low noise level for customers of the restaurant, and Mr. Postma acknowledged its importance. Member Wendland asked about current projections for the multi-family rental pricing as compared to the earlier target. Ms. Zahn advised that the rates are surveyed constantly, particularly as they must demonstrate to lenders and investors that pricing is in the target-market range. Discussing the distinctive market environment in Lake Oswego, she noted that the Mercato Grove and The Windward Redevelopment Agency Meeting Minutes Page 2 of 4 July 19, 2022 projects, regarded as comparable to this one, are tracked very closely. This will help in guiding price points that are reasonably conservative, i.e., in the middle of that comparable-market range. In response to Member Wendland's questions about their approach on capital markets, she explained that a bank would be the debt partner, with differing percentages loaned on the residential and hotel components; the remainder would be private-equity funding. Also being considered is an institutional partner. She clarified that the hotel company would not participate as a capital partner, but would simply be the operator. Their experience and good track record also will provide benefits as potential investors consider the project. At Ms. Bennett's suggestion, Chair Buck and Ms. Zahn agreed that the next Board update would be scheduled, likely for some time in the fall quarter. Member Wendland asked about the possibility of including pads for artwork in the project as art is greatly valued by citizens. Ms. Zahn confirmed that this is already in the plans. 14.2 Approval of LORA Meeting Minutes. April 5, 2022, Draft Regular LORA Meeting Minutes Board Member Rapf moved to approve the LORA meeting minutes as written. Board Member Manz seconded the motion. A voice vote was held, and the motion passed, with Chair Buck and Board Members Manz, Wendland, Nguyen, and Rapf voting `aye' (5-0). 15. CONSENT AGENDA— Board Members Only Motion: Move to adopt the Consent Agenda. 15.1 LORA Resolution 22-02, A Resolution of the Lake Oswego Redevelopment Agency (LORA) Making Appointments to the LORA Budget Committee. END CONSENT AGENDA Board Member Wendland moved to adopt the Consent Agenda. Board Member Manz seconded the motion. A voice vote was held, and the motion passed, with Board Members Manz, Wendland, Nguyen, and Rapf voting `aye' (4-0). 16. ADJOURNMENT, REDEVELOPMENT AGENCY (LORA) Chair Buck adjourned the LORA meeting at 6:04 p.m. Respectfully submitted, Kari Linder, Recording Secretary Redevelopment Agency Meeting Minutes Page 3 of 4 July 19, 2022 Approved by the LORA Board on Joseph M. Buck, Chair Redevelopment Agency Meeting Minutes Page 4 of 4 July 19, 2022