I attended last Monday’s Springfield Economic Development Agency (SEDA) meeting expecting to find who the agency chose for the massive Glenwood revitalization project I reported on a couple of weeks ago. Instead, the members of the SEDA board retreated to an executive session to mull over the Glenwood proposals(1); however, they did not do so before I learned about an entirely different project. I found that project—the proposed redevelopment of the former Springfield Motors (Buick) site located at 702 A Street in downtown—of great interest, in many respects of equal significance to the future of Springfield as either of the massive Glenwood proposals.
The Scherer family—owners of the property and former operators of the Buick dealership before closing the business in 2019—wishes to see the site sustain its legacy as a positive and vibrant part of downtown Springfield. They have worked with SEDA since the closure of the dealership to identify mutually beneficial goals, particularly the desirability of introducing market-rate housing as part of a mixed-use project on the site. SEDA introduced the Scherers to Northwest Sustainable Properties (NWSP), a Portland developer with a successful track record of thoughtful projects supportive of the ethos and cultural scene of the Portland neighborhoods in which it has built. The Scherer family and NWSP are now working together under the banner of Blue McKenzie, LLC with the hope of replicating Northwest Sustainable Properties’ Portland successes in downtown Springfield.
SEDA furnished Blue McKenzie with a grant in 2019, which funded a necessary feasibility assessment. Blue McKenzie settled upon a proposal involving the 8-story, mixed-use mass timber building concept depicted in the rendering above. Blue McKenzie estimates the project’s development cost to be approximately $27 million. The new building would occupy tax lot 2300 (which served as a parking lot for the former dealership—see the map below) and include ground-floor commercial space (approximately 5,000 sf) with 7 stories of apartments above (approximately 85 units). Based solely on what I see in the rendering, it seems the shuttered dealership’s Streamline Moderne showroom building will be repurposed, perhaps as an eatery or drinking establishment. Blue McKenzie anticipates a mid-2022 construction start, with completion occurring the following year.
Monday’s meeting included an affirmative vote by the Board authorizing the City Manager to negotiate and execute an agreement to loan $2,000,000 to Blue McKenzie LLC for acquisition and predevelopment work. The execution of a memorandum of understanding between SEDA and Blue McKenzie in March preceded this vote. In addition to outlining the structure of the initial $2 million loan, the MOU further proposes a second, long-term SEDA loan of up to $10 million to assist with construction funding. The terms of the second loan agreement would include immediate repayment of the initial $2 million loan ($8 million net). Additionally, the project would be fully taxable upon completion, as opposed to any deferral of property tax payments (such as that offered by the City of Eugene through its Multi-Unit Property Tax Exemption program).
City staff recommended SEDA’s participation in the financing of the project for several reasons:
- The introduction of a new construction type and residential product lacking comparables in the downtown Springfield real estate market.
- Current rental rates, which lag both the escalation in development costs and Springfield’s growth in population.
- Recent data for comparable projects in other communities indicating a trend toward higher rents.
These factors contribute to perceptions of investment risk by commercial lenders. SEDA’s backing would help mitigate these concerns.
The project may be subject to State prevailing wage laws if its funding includes the second, $10 million construction loan.
I wasn’t paying enough attention during the meeting to exactly remember, but I believe the design team includes LRS Architects of Portland and the San Antonio, Texas firm of Lake/Flato Architects. Additionally, Siteworks Design/Build—which is led by JP Veillet, who also founded Northwest Sustainable Properties—has a hand in the proposed plan. That’s a lot of design firepower for what in the grand scheme of things is a relatively modest project.
Whether the concept will pencil out is an issue. The past year’s alarming rise in the price of building materials threatens the viability of not only Blue McKenzie’s proposal but other prospective developments as well.
I’m encouraged by SEDA’s enlightened support of the Blue McKenzie proposal as well by the desire of the Scherer family to reinvest in downtown Springfield after operating their landmark business there for so many decades. This mixed-use concept is precisely the kind of development the City of Springfield should welcome with open arms: smart, urban, mixed-use projects adding much-needed housing stock and amenities that contribute positively toward walkable communities and compact growth. If it is successful, it will undoubtedly beget similar projects attracted by the steady rejuvenation of Springfield’s historical core.
(1) To the best of my knowledge, the SEDA board has not announced their choice between the proposals submitted by Glenwood Development, LLC and LOCALIS Partners.
1 comment:
Thank you for the excellent information you have provided about this proposed project.
I appreciate it.
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