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Agenda Item - 2024-12-03 - Number 15.1 - Approval of LORA Meeting Minutes 15.1 o�" F °s� REDEVELOPMENT AGENCY REPORT mooro OREGO\--" Subject: Approval of Lake Oswego Redevelopment Agency (LORA) Board Meeting Minutes Meeting Date: December 3, 2024 Staff Member: Kari Linder, Recording Secretary Report Date: November 26, 2024 Department: City Manager's Office Action Required Advisory Board/Commission Recommendation ❑X Motion ❑ Approval ❑ Public Hearing ❑ Denial ❑ Ordinance ❑ None Forwarded ❑ Resolution ❑X Not Applicable ❑ Information Only Comments: ❑ Board Direction ❑X Consent Agenda Staff Recommendation: Approve minutes as written. Recommended Language for Motion: Move to approve the LORA meeting 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. October 15, 2024, Draft Regular LORA Meeting Minutes Respect. Excel'er.re Trust. Se-vim 503-635-0215 380 A AVENUE PO BOX 369 LAKE OSWEGO, OR 97034 WWW.LAKEOSWEGO.CITY ATTACHMENT 1 Krc LAKE OSWEGO REDEVELOPMENT AGENCY MEETING h+ MINUTES "Slil" 0 V r October 15, 2024 OREG9 1. CALL TO ORDER, REDEVELOPMENT AGENCY (LORA) Chair Buck called the regular Lake Oswego Redevelopment Agency (LORA) meeting to order at 3:02 p.m. on Tuesday, October 15, 2024. The meeting was held both virtually via video conferencing and in-person in the Council Chamber at City Hall, 380 A Avenue. 2. ROLL CALL Present: Chair Buck and Board Members Corrigan, Afghan, Wendland, Verdick, Mboup. Board Member Rapf was Excused. Staff Present: Martha Bennett, Executive Director; Ellen Osoinach, LORA Counsel; Kari Linder, Recording Secretary; Sidaro Sin, Redevelopment Manager Others Present: Eric Cress, Principal and President, Urban Development Partners; Kurtis Fusaro, Senior Development Manager, Urban Development Partners; Will Naito, Naito Development LLC 3. PLEDGE OF ALLEGIANCE Chair Buck led the Board in the Pledge of Allegiance. 4. BOARD BUSINESS 4.1 North Anchor Project Update. Mr. Sin advised the Board about upcoming work at the gas station site on State Street over the next four to six months. The Department of Environmental Quality (DEQ) had directed the City to decommission three underground storage tanks on site: two 6,000-gallon tanks and one 15,000- gallon tank,which had been under temporary closure permit since the City purchased the property in 2005. Decommissioning would involve conducting a study with test pits around the tanks to check for leaks, cleaning the tank interiors, and filling them with water rather than concrete slurry. This water-filling approach, approved by DEQ, would make it easier for Urban Development Partners (UD+P) to remove the tanks during future demolition work. Redevelopment Agency Meeting Minutes Page 1 of 3 October 15, 2024 Mr. Cress reviewed the Board report via PowerPoint, reviewing changes to capital markets that could impact the project's financing. Mr. Fusaro continued the presentation with an update of UD+P's work with DEQ regarding the prospective purchaser agreement and environmental issues for Parcel C, which formerly housed a gas station and dry cleaner. The presentation also reviewed extended land use approvals and residential permits and noted that UD+P planned to resubmit the permit for the hotel due to changes in code. Mr. Naito resumed the presentation, reviewing five major hotel franchisors and the potential to incorporate soft brands/hotel collection into the project, summarizing operational advantages for hotel management and enhanced credibility a soft brand partnership would give project financing. Hotel franchisors had expressed interest, and the terms outlined by franchisors were favorable. Naito Development was undergoing an internal process to determine whether to flat the property. Mr. Cress added the hotel franchise process would be wrapped up when the last term sheet was received. There was an additional expense with soft brands and the partners had to weigh whether the additional financing attraction would outweigh the expense. Mr. Fusaro continued the presentation with an overview of the schedule for the next 12 months, noting the team hoped to begin a deep financing outreach for both equity and debt after November's election. In the beginning of the New Yeah, UD+P would go back in to resume the permitting process and hoped to start construction in the middle of the following year. Mr. Cress added the partners would continue to work on negotiating the soft brand over the next few weeks and summarized the extensive underwriting process involved. The financing position of trying to get through the election and getting everything in order applied both to the hotel and the apartments. Mr. Cress provided an update on building demolition and advised that UD+P's attorney had advised against proceeding with demolition due to liability concerns for UD+P and the City, particularly given the timeline. While UD+P could continue to explore options, no solution was evident. Board Member questions were addressed by the consultants as follows: • Mr. Cress indicated UD+P would pursue local financing and syndication for the apartments, while exploring a two-path approach for hotel financing including outside institutional capital and local financing/syndication. • Mr. Naito noted all soft brands contacted were familiar with Lake Oswego, except European- based Accor. • Mr. Cress said UD+P was as confident as possible regarding the schedule and breaking ground next summer. There was ambiguity to work through over the next eight weeks, but the company felt reasonably confident about gaining traction in December and early 2025. Financing remained the primary challenge, but the company felt better than it had in 12 months due to ebbing inflation. • They were not counting on further interest rate drops, though they did not expect rates to increase. The company planned to present based on current market conditions. Redevelopment Agency Meeting Minutes Page 2 of 3 October 15, 2024 • Mr. Naito reported hotel soft brands had deep understanding of the regional market due to their Pacific Northwest presence, and all the brands contacted were interested in having an outpost in Lake Oswego. • Mr. Cress noted that while soft brands were well-informed about the local market, national financiers remained skeptical about the Portland region. Regional banks better distinguished Lake Oswego from Portland. • Mr. Fusaro explained the apartments were further along in permitting than the hotel. The hotel required resubmission due to code changes, with an estimated six-month process. • Mr. Fusaro and Mr. Cress discussed construction costs, noting recent stability in prices. While new Code requirements would increase some costs such as concrete, HVAC, and environmental standards; overall costs had decreased in other areas, resulting in no net escalation. 4.2 Approval of LORA Meeting Minutes. June 18, 2024, Draft Regular LORA Meeting Minutes Board Member Wendland moved to approve the LORA Meeting Minutes as written. Board Member Verdick seconded the motion. A voice vote was held, and the motion passed, with Chair Buck and Board Members Corrigan, Afghan, Wendland, Verdick, and Mboup, voting `aye', (6-0). 5. ADJOURNMENT, REDVELOPMENT AGENCY (LORA) Chair Buck adjourned the LORA meeting at 3:33 p.m. Respectfully submitted, Kari Linder, Recording Secretary Approved by the LORA Board on {insert approval date). Joseph M. Buck, Chair Redevelopment Agency Meeting Minutes Page 3 of 3 October 15, 2024