LORA board agrees to terminate Upper Crust's lease

by: VERN UYETAKE - Upper Crust Bread Co. owner Alice Seeger, left, and her mother, Phyllis, hold a sign letting customers know they're preparing to close the bakery at 41 B Ave.This Thanksgiving is the last for Lake Oswego’s Upper Crust Bread Co.

Bakery owner Alice Seeger, who lives in West Linn, said when the store finished fulfilling the last orders of apple, pumpkin and marionberry pies, cranberry spice and spinach parmesan rolls and pastries for the holiday, it will close. The final day in business was set for Wednesday.

It’s not a happy ending for Seeger, who said her business plans have been hampered by a Lake Oswego redevelopment initiative: the North Anchor project, a mixed-use development with a new public library, public parking and businesses.

The city plans to redevelop the area around First and B — demolishing several buildings, including the one in which Upper Crust now sits. But it’s unclear when that all will happen. A bond measure aiming to finance the library part of the project failed last week.

“That’s the part that’s the most troubling to me: the uncertainty it creates,” Seeger said. “It creates an opportunity for the city to take advantage of small-business owners.”

Seeger contends that the ongoing uncertainty created a “cloud” over her lease, foiling her goal of selling Upper Crust around 2010. She quit paying her roughly $4,000 monthly rent at the beginning of October to “draw a line in the sand,” she said; the Lake Oswego Redevelopment Agency assumed responsibility for her lease when it bought the building over the summer.

City officials last week approved an agreement terminating Seeger’s lease, waiving October and November’s rent — and, consequently, any payments expected in the future — and giving her until the end of the year to move out her equipment.

City Councilor Bill Tierney, acting as a member of the redevelopment agency board, said the unanimous decision was “based upon our understanding that Better Bread Inc. (Upper Crust’s corporate name) intends to go out of business.”

The two sides disagree about how Upper Crust’s troubles began.

Even before the library measure failed, it was unclear when the North Anchor project would proceed, Seeger VERN UYETAKE - Gourmet Productions, a catering operation and specialty food and dining spot, will soon be the only business in this building, owned by the city and slated for redevelopment.

Knowing the city could move ahead at any point in the next few years — likely requiring Upper Crust to move well before its lease expires in 2017 — has put Seeger in a tough spot, she said: Who could get a loan to buy her business without a stable, long-term lease?

At the same time, she said, business slowed when public discussions of the North Anchor project gained steam over the past two years.

“To be honest with you it’s not about the money; it’s that they’re clear they’re going to enforce my obligations under the lease,” Seeger said. “Their only real obligation under the lease is to guarantee I’ll be there for five years, and they won’t do that.”

If Seeger’s business hung on until the project advanced, the city would have helped pay to relocate it, including actual moving costs and other benefits required by state and federal laws. But Seeger said too much damage had already been done.

Earlier this month, Lake Oswego Mayor Jack Hoffman said he generally supported looking for a solution with Upper Crust.

That’s because “small local businesses are the key to success of downtowns,” he said. “Generally what experts say is for small towns to be vibrant town centers, to really be legitimate and to be very real, they need to have a mixture of regional retailers and local retailers.”

He added that he valued Upper Crust’s regular presence at the city’s farmers market.

While Upper Crust isn’t the only business in city-owned buildings slated for redevelopment, Hoffman said he wasn’t concerned about the situation affecting relations with other tenants.

“Arrangements can be tailored to each business’ particular situation within a broad framework of treating everybody the same,” he said.

Urban renewal efforts aim to spur economic development, enticing private investment in certain areas. The idea behind the North Anchor project is to eventually draw visitors from Lake View Village, a past public-private redevelopment effort, up First Street to B Avenue.

Economic Development Manager Jane Blackstone said officials have actually tried to spur activity in the area ahead of the North Anchor project.

Of four properties Lake Oswego now owns in the area, one, at 500 First St., had three vacant spaces when purchased. Officials leased out two of the units to the city arts council; the other, where Lacey’s restaurant used to be, is in too bad of shape for a lease, and so it remains empty, according to the city. Down the block, in the same building as Upper Crust and Gourmet Productions, a barbershop recently left; Blackstone said the shop decided not to renew its lease before the city bought the property.

“LORA endeavors to minimize impacts on the retail community to the extent possible when planning or implementing projects to improve the downtown,” Blackstone said. “In the case of a site assembly like the North Anchor project or Lake View Village, there will be a period of transition.”

With Lake View Village, the redevelopment process took years. But in the end, Blackstone said, that effort “created many more jobs and businesses than were relocated, more tax value, more vibrancy, a more attractive property, and a positive ‘halo’ effect on other properties in the downtown and adjacent neighborhoods.”

In the case of existing businesses at First and B, she said, “Our goal is to retain businesses in Lake Oswego and assist with finding new locations where they will thrive.”

Over two decades at 39 B Ave., Gourmet Productions co-owner James Joyce has watched his catering business grow to include a dining establishment and specialty food and wine shop. The business has 14 employees.

Of the North Anchor project, Joyce said, “The approach I’ve taken with it is I don’t really have control.

“I think the city withholds a lot of information; you have to really pry it out of them.” At the same time, he said, “I have enough on my plate running my business. ... Having the amount of employees we have, I’ve chosen to take the position of ‘wait and see.’”

If eventually asked to relocate, he said, he likely wouldn’t keep Gourmet Productions in Lake Oswego.

“It works because it works here,” he said. “I’m not that relocatable. It would mean leaving a place I have a really important connection to, and in all likelihood, I wouldn’t be in Lake Oswego. That would be a sad day.”

Overall, uncertainty surrounding the North Anchor project hasn’t created many hiccups for Gourmet Productions — likely in part because it has been established for such a long time, Joyce said.

Seeger, however, has been trying to build the retail side of her business. That was her plan when the 14-year-old company outgrew its previous location by Albertsons on State Street: to develop retail offerings while maintaining the wholesale side, eventually selling the bakery. The move to B Avenue six years ago required an investment to meet industry codes, Seeger said. Upper Crust has 16 employees, including six who work full time.

She now plans to shut the shop and return to her previous career as an attorney.

“If you want people to make private investments to create businesses in an area, there’s no upside to somebody investing — like me — all of the money I put into that building, to not be able to get it out now,” she said. “As much as we love our customers, through this experience I couldn’t recommend anyone open a business in this community. The people who live in this community deserve so much better.”

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