Sale of Lake Oswego's West End Building to Yakima will close Aug. 21
City Council approves a $248,160 credit for repairs to the controversial property
The Lake Oswego City Council voted unanimously Friday morning to approve a $248,160 credit for repairs to the West End Building, clearing the way for the sale of the property to Yakima Products Inc.
The amendment to the sales agreement provides $27,060 to replace a non-compliant fire protection system, $73,750 for asbestos testing and abatement, and $95,600 toward the estimated $128,000 cost of replacing an outdated elevator in the 89,000-square-foot building at 4101 Kruse Way.
The agreement includes an additional $51,750 in miscellaneous costs, which include replacing bearings in HVAC equipment and assorted exterior repairs related to water intrusion. All of the repair needs were discovered during Yakimas due-diligence period, which ended today.
Think about it as if you were selling your house, but you needed to fix a leaky roof or mold problem before closing, Redevelopment Director Brant Williams told The Review. We dont have time before closing to do that in this instance, so instead it would be considered a credit at closing.
The agreement approved by the council Friday also gives Yakima access to the property a couple of days ahead of closing to begin interior renovations. The Beaverton-based cargo equipment company hopes to move into its new headquarters by Dec. 1.
They would like to start yesterday, Williams told the council.
Williams said that with the credit in place, Yakima CEO Ryan Martin – who attended Fridays council session – will waive any other contingencies and is ready to close on the deal Aug. 21.
When that happens, it will end the citys nearly year-and-a-half-long process of attempting to sell the 14-acre property, which it first acquired in 2006 in the hope of converting it into a community center. Those plans were derailed by the Great Recession, however, when voter support lagged and the city resolved to put the property back on the market.
Two subsequent offers fell through. A $16.5 million-bid from San Francisco-based Kensington Investment Group, which would have required significant rezoning, fell apart in March 2014; last November, developer Nick Bunicks lofty plans to house his nonprofit The Great Tomorrow at the WEB and his $20 million offer for it disintegrated when his funding failed to materialize.
At that point, the Council agreed to hire the commercial real estate firm Cushman & Wakefield, a decision that resulted in a dozen sealed bids from a variety of suitors.
Martin told The Review the property acquisition process had moved quickly after the city accepted Yakimas $20.1 million offer in June.
From a time perspective, Martin said, its been like a freight train.
He said there is an intense remodel slated for about 60,000 square feet of the former Safeco Insurance office building, where Yakima will house its research and development center, office space and common areas. The company has agreed to lease back office space to the city for the Lake Oswego-Tigard Water Partnership until that project is completed, probably for two years. The citys Parks & Recreation Department is already in the process of relocating to Palisades Elementary School.
Martin admitted that purchasing property from a city, rather than from a private property owner, had presented its own unique challenges, such as working with an entire council rather than an individual and negotiating through council timelines.
But despite the relatively intense due diligence process, Martin said, its been a good, open dialog with the community and the city.
Mayor Kent Studebaker praised the deal, noting that it removes a debt of $16.8 million from the city's books and eliminates more than $1 million in annual loan payments, operations and maintenance costs. "It also brings that property back on the tax rolls, so that is even more financial benefit," he said.
"More than that," Studebaker said, "it brings to us the headquarters of a vibrant company with great name recognition. Hopefully, we can use this as a draw for other businesses."
Councilor Jackie Manz called Yakima a good fit for the Lake Oswego brand.
We have a richness of outdoor activities here the river, parks, walking and light hiking trails, road biking and, in time, mountain biking, to name a few, she said. As we work to attract a younger demographic to live, work and play in Lake Oswego, Im excited that Yakima could be a draw to bring other outdoor recreation companies to the area.
Councilor Joe Buck agreed, telling The Review on Friday he was glad that at the end of the due diligence period, we were able to close the agreement with Yakima with only relatively minor changes to the purchase and sale agreement. Yakima brings quality jobs to Lake Oswego and is the type of innovative employer we aim to attract.
But I'd be remiss, Buck added, not to mention that, while this buyer is ideal, we must continue to focus on long-term solutions for our community space needs. Hopefully, the strong purchase price will enable us to fund these vital community services.
Contact Saundra Sorenson at 503-636-1281 ext. 107 or email@example.com.JW_DISQUS_ADD_A_COMMENT