Oregon: City to buy former Kmart property

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The City of Oregon has reached a purchase agreement with the firm that owns the Navarre Avenue property where a Kmart store was located.
The city had been leasing the property at 2830 Navarre Ave. since 2018 from AMJB LLC, a Delaware company, but the parties recently agreed to a purchase price of $4.25 million.
The sale is to be completed by or before Sept. 30.
Joel Mazur, city administrator, informed city council at its most recent regular meeting that the administration has opted to issue bonds to finance the purchase of the 12.4-acre parcel.
Mazur said the administration had anticipated an interest rate of 4.6 percent to 4.8 percent but was able to secure a rate of 4.03 percent.
“We feel it is the best decision going for a bond,” Mazur told council.
According to the city’s finance office, the city is currently paying $23,505 per month on the lease. That would increase to $25,641 per month by March 2025 if the city hadn’t exercised its early purchase option. The city is also paying about $50,000 annually in property taxes on the parcel but those payments stop after the city transfers the parcel to a developer that the administration has retained.
To pay off the bonds, the administration will establish a public financing instrument called a Tax Increment Financing district used by local governments to fund infrastructure and other improvements. In turn, the improvements benefit development. The objective is to recoup interest and other costs through an increase in property tax revenue resulting from a completed development project.
In April, the administration opted to terminate a contract with a company it had retained for developing the former Kmart property, which city officials have called Town Center. A new development agreement has been signed with River Rock Property Group, a Toledo-based firm.
Bill Bostleman and Mike Denman, principals of the firm, have said they supported the city’s purchase of the property because it shows the city’s commitment to the site, which is appreciated by businesses interested in locating on the property.
During a June meeting of council’s finance committee, Mazur and mayor Mike Seferian told the committee that by taking ownership of the site the city would be signaling it is serious about seeing it developed.
City council voted unanimously to proceed with the bond issue but one council member, Beth Ackerman, during the roll call said her vote was a “hog tied yes.” In previous discussions about purchasing the property, she has voiced concern about the city assuming so much debt.