City property for rent

City Property For Lease

Lake Oswego Redevelopment Agency (LORA) Meeting

November 18, 2014  

Agenda Item    4.2.1.  Approval of 41 B Avenue Lease 

                         Staff Report  

The lease on the LORA agenda was a retail space at 41 B Ave., one of the buildings purchased by the Lake Oswego Redevelopment Agency for the North Anchor Block development.  The last renter there was Upper Crust Bakery.  After the city purchased the property, the bakery went out of business.  Upper Crust had employed 16 people, 6 full time, and at the time they left (the day before Thanksgiving two years ago) the bakery was paying $4,000 per month for rent.   
 The start date for new (original) lease for 41 B Ave. was approved at the LORA meeting  on May 20, 2014.  The lease renewal was approved at the November 18, 2014 LORA meeting.  
  At the May 20, 2014 LORA meeting, the board also leased the former barber shop space  (1,081 SF) at 41 B Ave. to Cinematouch, owned by Lake Oswego resident David Working, DBA Connectechs.  The barber shop paid $1,952 per month for rent.  The Cinematouch lease was the only one on the agenda for the May LORA meeting, but the staff also presented a last minute request for the rental of 41 B Ave. by Wishbone Home and Design.  There was no paperwork available at the meeting, but the board approved the deal with the same terms as Cinematouch.

The rent on both spaces is $0.46/SF per month, or $5.52/SF annualized, for a monthly rent of  $460 for 1,000 SF.  For comparison, in its report to the LORA board on July 22, 2013, staff wrote: 

Julie’s Travel Desk, has exercised its two-year lease option at the current lease rate of $17/SF, full service. The Agency is obligated to honor the two-year lease option, with a determination to be made on the current market rate. The 2011 appraisal of the 525  building identified full service rents for comparable properties in the $16-20 range. Rents for the 525 Building range from $13 – 25.

The new rents are obviously a good deal.  Both spaces had been vacant since the city purchased the property in 2012.  Did the city advertise the spaces for rent?  Even in poor 
condition and without a guaranteed long term lease, a discounted market rent should be 
much higher than $5.52/SF.  
  
How much could the city get for these spaces if they were marketed as short-term rentals in  a prime location in downtown LO?  We don't know because no one tested the market.  

The Staff Report explains that "reasonable lease rates" support "start-up businesses."   To the best of my knowledge there Is no policy that this was how the city wanted to use public property nor was there publicity that the rental space was available to new businesses.  In fact, Mayor Studebaker once suggested that the city's unoccupied buildings could be used as public meeting space - certainly worth the $5,520 in annual rent the city is collecting now.  

41 B Ave. is rented by Wishbone Home and Design, owned by Julie Aronson, Kim Nilles and Katie O'Neill. (See article below.)  Katie O'Neill is the daughter of Councilman Skip O'Neill. At the time of the original lease, one of the owners might have been Lynda O'Neill, (wife of Councilor O''Neill) as she is listed as such on the business registration filed with the state.  

There was no mention of any familial connection between Skip O'Neill and the lesee in the Staff Reports or by Councilor O'Neill himself in open session, and he did not recuse himself from voting on the lease agreement and renewal.  No matter the price, no matter the circumstances of the deal, I believe it would have been the right thing to do for O'Neill to state his personal interest in the matter and step aside.    

It should be the city's obligation to maximize the return on taxpayer investments and not make up programs to assist certain businesses on the fly.   The best possible way for the city to make real estate deals is to work with professional real estate agents - that no one in city hall knows - so there can be no question of bias. The city council should also have in 
place policies about how city assets should be handled.  

    arm's    length adj. the description of an agreement made by two
 parties-freely and independently of each other, and without some special relationship,such as being a relative, having another deal on the side or one party havingcomplete control of the other. It becomes important to determine if anagreement was freely entered into to show that the price, requirements, andother conditions were 
fair and real. Example: if a man sells property to his sonthe value set may not be the true value since it may not have been an "arm'slength" transaction. 

Three women 'eat, sleep and breathe design'
Lake Oswego Review, October 2, 2014  By Barb Randal

If you want give your home a total new look or just freshen it by incorporating a few new items, Wishbone Home and Design might be just the place to start. Opened this summer at 41 B Avenue in Lake Oswego, it takes just one step inside the shop to get the inspiration flowing.

Owned by Julie Aronson, Kim Nilles and Katie O’Neill, the interior design shop offers unique furniture, tabletop items, rugs, lamps, mirrors and many more items.

“I was tired of borrowing my dad’s truck (to haul large items),” O’Neill said. They started looking for showroom space and happened upon the former Upper Crust Bakery location.

“It just came together,” Aronson said. “The shop just fell into our laps.” 

See also:  Facebook - Wishbone Home and Design