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The Press Newspaper

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        Oregon on Monday held a meeting on downtown development in city council chambers. The focus was mostly on the development of property where the former Kmart store is located on Navarre Avenue, an area where the city wants to develop a downtown area.

        Oregon in the last couple of years has been in the process of acquiring property in an effort to create a downtown area. In 2017, council passed a resolution in support of designating a zoning overlay as the first step in creating a downtown area that would include retail, residential, an entertainment district, and open green space along Navarre Avenue. The overlay district covers three areas bordered by Isaac Streets Drive, Navarre Avenue, Coy Road, Dustin Road, and Pickle Road, an area that totals 167 acres.

        The goal of the overlay district is to make it easier for the city to welcome modern development. Developers will have the option to bring buildings up closer to the front lot line to make some walkable space, and to move in some innovative ways with parking.

        To that end, the city acquired 30 acres of property from Navarre Avenue to Pickle Road, and property south of Dustin Road, including the former WOHO radio station property on Pickle Road. Plans call for that area to be mixed use residential and retail development.

        The city appropriated $3 million in the municipal budget for land acquisition and development in the core of the city.

        Oregon purchased the 30-acre site, behind the former Kmart on Navarre, for $1.4 million.

       

Due diligence

        Oregon also authorized a ground lease/purchase agreement for the former Kmart property for a 120 day due diligence period that ends on April 26.

        The city wants the property as part of its downtown development project. 

        During the due diligence period, the city wanted to determine whether it should enter into a 10-year lease with an option at the end of the 10 years to buy the property for $3.7 million, with lease payments of approximately $300,000 per year during the period. The city also had to determine whether the cost of demolition, the interest in development, and its capacity to develop were practical in an effort to move forward.  Final engineering estimates will be obtained for demolition to determine suitability for possible development.

        “We’re in the final weeks of our due diligence phase,” City Administrator Mike Beazley said at the meeting on Monday. “The title work is in its final stages.”

        The administration has recommended the city move forward with the agreement, added Beazley. Legislation on the matter will go before council within the next couple of weeks.

        “We’re ready to move forward,” he said.

        The owner of the property wants the buildings torn down before the city takes possession, said Beazley. He estimates it will cost the city over $200,000 to tear down the buildings and abate some asbestos found at the site.

        The city will also bear the annual property taxes of $60,000.

        Beazley broke down the agreement: In years 1-5, the city will be pay $282,060 annually in lease payments. In years 6-10, the city will pay $307,000 annually. Oregon will then buy the property in the 11th year for $3.7 million.

       

Interested tenants

        The city already has tenants interested in leasing some of the property, which will help cover the costs, said Beazley.

        “Ultimately, our expectation is, we’re going to put a developer in our shoes. This is a risk the city is going to take. We know there are some commercial lots of about 1 acre each selling for up to $700,000 to $1.2 million in the area. We know we can carve out three or four lots across the front of the property and still have acreage in the back. We believe we can get that return,” he said.

        The city also wants to make an assessment of developers who are interested in the property.

        He said there are some developers who have expressed a “strong interest” in bringing in restaurants, movie theaters, medical offices and residential.

        “We have enough land available that we think we can achieve residential, from single family homes to senior oriented town houses, to an apartment complex that works for younger people closer to Isaac Streets Drive,” he said. There is also enough land for a mixed use office/retail/restaurant area.

        One of the developers did a drive through of the city last week. He had pointed out to Beazley the advantage of traffic heading to the Lake Erie islands, Cedar Point, and the local hospitals.

        “Our two hospitals bring in economic energy. There are thousands of people per day in and out of those hospitals – patients, visitors, doctors, sales people, nurses, technicians, people who go in for tests. And they become customers for other businesses in the area,” he said. The city also has access to I-280, another advantage.

        “The developer said when he sees the expressway exits both north and south of this site, it’s something they believe can benefit restaurants. They want that expressway access. They said they can make this a regional attraction that works for Oregon,” said Beazley.

       

Downtown development

        City officials provided a history of the desire to have downtown development and why there was so much interest in acquiring the Kmart property.

        Council President Dennis Walendzak said that when Kmart closed its store a few years ago, city officials expressed concerns about what could be done with the property.

        “How could we prevent the building from potentially sitting vacant in Oregon?” said Walendzak. “What could we do to direct what happens? As a company goes bankrupt, that building could potentially be sold in a bankrupcy hearing and we would then have no control over what kind of tenant goes inside that building.”

        Mayor Mike Seferian said the city made improvements to Navarre Avenue to make the area safer, and more attractive to future development.

        “We were always looking for something that could stimulate potential retail investors to come to our city. When I first got elected mayor, Mike Beazley asked me what my long term goal was. The long term goal was we would try to develop something that we would call our style of downtown along that Navarre Avenue corridor. So we’re thinking, what could we do to entice developers to want to locate a business here. So we started working on a plan to come up with some concept. We knew it couldn’t happen overnight.”

       

Risk

        A little over 15 years ago, the city and the Oregon Economic Development Foundation bought 150 acres of land to develop into industrial space. “They did it without a development partner that was committed to buying it, they did it without specific plans for all that land, and did it not to be land developers, but to help shape the future for Oregon. That was one of the smartest moves that Oregon could have made.”

        There were people who criticized it at the time – added Beazley. “They said, `Why should the city get involved in this?’”

        But it was on that land where warehousing was developed, as well as the Oregon Clean Energy plant, Fresenius, a medical care facility, and Autoneum, a manufacturing auto supply facility, he said.

        “There’s been well over $1 billion in capital investment, and hundreds of jobs that came from the city stepping up and taking risk. Smart cities go out and do those things. It was not done as an investment in land, but it was done as an investment in the future. That sort of approach really invested in the future in Oregon.”

        When he first came to Oregon as administrator, Beazley said council members and the public wanted restaurants and retail. “Retail is harder than it used to be. But there’s still opportunity for retail. We’re blessed with some wonderful businesses at our core. But our community has told us they want more restaurant choices. That’s probably our number one target. We’re excited about that opportunity.”

        Beazley said the city decided to take more risk by seeking to acquire the Kmart property.

        “We started talking to developers, especially when it became clear that Kmart was going to close. More than 5 years ago, that handwriting was on the wall as other Kmart locations were closing in this market. We looked at the challenges we had before. The last time we had a big box store had gone dark on Navarre, it stayed empty for almost 15 years. We saw what happened at the corner of Holland-Sylvania and Central, where the Kmart store has been at that site, which is now grass growing through asphalt, and land that has been empty for many years with semi trucks parked on it at an important intersection. In talking to our council members, we concluded we could not afford that kind of risk in Oregon. There is risk associated with moving forward, but there was greater risk for Oregon with stepping back and not doing anything and hoping it would work,” he said.

Infrastructure

        When city officials started talking to developers, they were told that the desire for the type of restaurants they wanted was hampered by space, attractive layout and investment.

        “That’s why city officials looked at making Navarre more attractive and safer, with the investment in turnlanes, public space and streetscape,” said Beazley. He added that is why there is more investment in infrastructure planned along the Navarre Avenue corridor, including improvements at the corner of Coy and Navarre.

        Another challenge is providing “walkable space.”

        “We have a lot of great housing in Oregon, wonderful subdivisions,” said Beazley. “We met with realtors across Northwest Ohio. One of the things we weren’t offering was a walkable space. It is something offered in Sylvania, Perrysburg and Maumee. People in the generation behind me are looking to buy a house or condo, and be able to walk to a coffee shop, restaurant, or tavern. They want to have that walkable experience. If I look at land sales and housing sales in those areas, there are lots of people who could be here making those choices.”

        The city also looked at quality rental options for people who may work in Oregon but don’t live there.

        “We have a lot of people working in our hospitals who live in Perrysburg because they haven’t been offered that quality rental. They do not see an option available to them to meet the lifestyle they are looking for,” he said.

        “As we look at Oregon’s demographics, we are among the oldest communities in the region. We have fewer school children. For a variety of reasons, we haven’t attracted that next generation of home buyer. So for those of you who are here, we want to make sure that someone is ready to buy your house and attract people who make their life here. We have to make sure we have a great range of choices, but we’re missing that niche.

       

       

 

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