City to open bids for WEB next week
Officials hope for an offer that tops the $16.8 million still owed on the property
Lake Oswego could move one step closer to unloading the West End Building next week when city officials open and review sealed bids on the 14-acre property.
Lake Oswego Redevelopment Director Brant Williams said the city will open those bids on March 12 and decide whether to proceed in negotiations with one or more of the interested parties. The process might even go as far as a draft purchase-and-sale agreement with a potential buyer that could be presented to the City Council as soon as March 17, Williams said.
The city hired the commercial real estate firm Cushman & Wakefield in December to sell the property at 4101 Kruse Way, which includes the 89,000-square-foot building that once housed Safeco Insurance offices.
At the time, officials opted not to set a sales price for the WEB; instead, the property was put up for bids in the hope of attracting an offer acceptable to the city.
Officials said as many as 10 companies have toured the site since December, but there was no indication of how many sealed bids have been received.
Our approach has been in this case to leave it as broadly open as possible, City Councilor Jeff Gudman said. A price for the building has not been talked about. We want to give maximum flexibility for people submitting the bid.
Williams reiterated this week that there is no asking price and no offer per se at this particular time. Theres just interest, and people formulating their offers.
The WEB has proven to be an albatross around the citys neck ever since it was purchased for $20 million in 2006. The propertys value plummeted soon after its purchase, and plans for building a community center there never came to fruition. With annual costs estimated at $1.5 million for loan payments, maintenance and operating costs, officials opted to put the property back on the market in 2013.
That decision brought two purchase agreements. The first, a $16.5 million offer from the San Francisco-based Kensington Investment Group, crumbled in early March 2014 amid zoning issues. The city then accepted a $20 million offer from local developer Nick Bunick on behalf of his nonprofit organization, The Great Tomorrow. (Bunicks offer also included an adjacent 1.3-acre parcel along Kruse Way.)
Bunick actually gave the city a $200,000 nonrefundable deposit on the property. But funds to complete the deal reportedly coming from the International Monetary Fund and the World Bank never materialized, and the city hired Cushman & Wakefield in December to place the WEB back on the market.
The goal now, Gudman said, is to maximize the benefit to the city, both financial and nonfinancial.
One of the numbers thats clearly out there is the $16.8 million that we still have in remaining debt on the building, he said. All of us would like to get $16.8 million, or hopefully even more.
Exactly how that plays out, however, is anyones guess.
The city could receive an attractive bid from a prospective buyer who asks for a zoning change. In that case, public hearings would be required in a somewhat lengthy rezoning process. On the other hand, a bid could come in well above the amount the city still owes on the building, and with no request for zoning changes.
In that case, Gudman said, there is no obligation to (solicit) public input, because we committed to selling the building and this would just be the outcome of that.
Just as likely, Gudman said, is that the city will have to weigh the pros and cons of multiple offers.
If we get a bid on the other side, lets say it comes in at $18 million but they want us to do a zone change, and somebody else comes in with a $17.5 million bid but they dont want a zone change wed have to sit down (on the council) and collectively decide among ourselves, whats more important?
The council also may simply decide to take a lower bid now, Williams said, rather than continue to pay interest and operating costs and risk waiting another year for a higher offer.
Under terms of the agreement signed in December, the city will pay Cushman & Wakefield a 1.5-perecent commission when the sale closes. If the buyer of the property is represented by another realtor, the city will pay a 2.25-percent commission that would be split between the two companies.
Cushman & Wakefield officials said at the time that their goal was to find a buyer and close on the sale by June 30.
Contact Saundra Sorenson at 503-636-1281 ext. 107 or firstname.lastname@example.org.