Repealing urban renewal plan raises questions for property owners

The Lake Oswego City Council is poised to repeal the Foothills urban renewal district, intended to spur redevelopment of the mostly industrial area between State Street and the Willamette River.

The council will consider terminating the urban renewal plan next week. The meeting begins at 7 p.m. Tuesday at city hall, 380 A Ave., following a 6:30 p.m. executive session.

The urban renewal plan, a list of potential public projects within the district, was approved by the last council in December — despite threats from some councilors that they’d help reverse that decision this VERN UYETAKE - This building, owned by Rob Fallow, sits in the mostly industrial Foothills area, which officials hope to transform into a mixed-use residential and commercial district between downtown Lake Oswego and the Willamette River.

Earlier this month, with a new group of council members in place, Councilor Jeff Gudman proposed dissolving the urban renewal plan.

He said he doesn’t think the city has to use urban renewal to achieve its vision for transforming Foothills. Repealing the urban renewal plan will not abolish the Foothills framework plan, a separate document adopted last July, which lays out the vision for a retail and residential neighborhood and outlines design standards for a new mixed-use development zone there.

“In general I support the framework plan,” Gudman said this week. “There is some concern on my part with the proposed possible heights of buildings, but that’s not a deal breaker for me, particularly when you look at the slope of the land there.”

He just doesn’t think urban renewal should be used to help finance it.

“I want to provide the developers and the property owners down there the opportunity to proceed as if this was a project like, say, Westlake or Mountain Park,” which developed without the city’s assistance to fund new roads or other public amenities, Gudman said. “Down the road, urban renewal may be a vehicle we want to use, but for now I don’t want to go forward with it.”

Multiple angles to Foothills debates

Critics of the Foothills district generally fall into a couple of camps.

Some have spoken out against the framework plan, railing against the idea of allowing buildings as tall as nine stories and denser development than elsewhere in the community.

Others have mainly taken issue with using tax increment financing — money generated from growth in the district’s tax base — to pay for public projects meant to encourage more development.

The urban renewal plan authorizes the use of tax increment funding for about 20 infrastructure projects, including relocated sewer and stormwater mains, landscaping improvements and transportation upgrades, such as a new “northern portal” into the district via a new intersection, reconstruction of Foothills Road and an extension of B Avenue across State Street from downtown.

In addition, a new staircase would lead toward a public plaza by Foothills Park, and $8.8 million would go toward helping developers build affordable housing. The city would have to find money to get some of the work started, but officials said a loan could be paid back with money generated by development.

Some critics oppose both the Foothills framework and urban renewal plans.

Supporters, on the other hand, contend redeveloping Foothills will provide new housing while broadening the city’s tax base. They have pointed to an economic analysis that found investing in Foothills could help boost property tax revenues by millions of dollars within 26 years, providing money for not only city services but also public schools.

At a meeting on Jan. 15, Doug Cushing of the Lake Oswego Chamber of Commerce urged the council to keep the Foothills plans in place. He said the city has avoided risk by requiring that development agreements are in place before public projects can be funded, and he doesn’t think anything will happen there without urban renewal.

“Based on what we’ve seen, it would be very, very difficult,” Cushing said.

Funding in question

A 14-member citizen advisory committee and a five-member citizen oversight committee spent more than a year working on the Foothills plans, commissioned in 2010 by the city, in partnership with developer Williams, Dame & White and Foothills property VERN UYETAKE - Lake Oswego hopes to turn the mostly industrial Foothills area, pictured here, into a new mixed-use neighborhood.

The $1.3 million approved for planning included city funds, grant money and a $130,000 pledge from a group of property owners who control the large chunks of land in the Foothills district. The agreement called for property owners to reimburse the city for $130,000 with the adoption of the framework plan.

Brant Williams, the city’s director of economic and capital development, said officials don’t believe that backing out of the urban renewal plan will require forfeiting that money.

The impact of backing out now, he said, would be that public improvements needed in Foothills will instead have to be funded by private property owners and developers or investors.

But Gudman said this week that he thinks some of the projects should instead be financed from the city’s general fund or other sources. He hopes to move some of the urban renewal plan ideas onto the city’s long-term capital improvements list, where they would compete with other projects for limited funds. Another project could be moved back into the city’s downtown urban renewal district, he said.

‘In limbo’

Still, some local property owners aren’t convinced the city can meet the spirit of its agreement without an urban renewal area. The agreement included a condition requiring the creation of a financially feasible redevelopment plan.

Rob Fallow, who owns a building on a flag lot off Foothills Road, said urban renewal is essential for the framework plan to work.

Public infrastructure projects are “critical components” of the framework plan, he said. “Without those, it wouldn’t be financially viable to redevelop down there.”

At the same time, he said, “The city is going to get an asset and they’re going to get a lot of tax money out of it. There’d be a lot of public good.”

Fallow became involved in Foothills redevelopment efforts more than a decade ago, although it wasn’t his idea at the time. City officials had identified the area for some sort of transformation. Property owners advocated for a seat at the table.

Around 2010, as planning in the area gained more traction, Fallow felt a sense of relief.

“When you have property like we have, not knowing if it’s going to be redeveloped or not, you don’t know whether to put a new roof on your building,” he said. “You don’t know whether to put five-year leases on the property, because you might be tearing it down. You’re kind of in limbo.”

He said Foothills property owners have warehouses and offices; one has as many as 80 employees, while others have industrial operations, including a concrete plant, that could be difficult to move. Many lots are geographically constrained without proper street access, and the area includes “crisscrossed land ownership.”

Now, he’s wondering whether Foothills property owners will be left in the lurch.

“Right now we’re very concerned,” Fallow said. “We’ve committed and participated in a process we assumed was going to be finished. It’s not, but we hope it will be.”

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