A few bumps on road to redevelopment?

Byline: Jack Moran The Register-Guard

SPRINGFIELD - On the plus side, a 48-acre pocket of Glenwood between Franklin Boulevard and the Willamette River is centrally located, is potentially scenic and has drawn interest from a major development firm, a city-hired consultant concludes.

But in a newly released report, a consultant underscores that significant challenges - from negotiating and acquiring properties held by more than a dozen land owners, to ensuring that a proposed mix of uses would be financially profitable in what is now a gritty industrial area - stand in the way of success.

Still, the consultant concluded that a plan to redevelop the Glenwood riverfront is a realistic long-term - that is, 10- to 20-year - goal.

The city commissioned the study, by Portland-based Leland Consulting Group, to determine the feasibility of redeveloping Glenwood's northeast corner. The city is paying Leland $47,000.

One key obstacle the report focuses on: Many of the property owners in the 48-acre area have said they would want to be paid much more for their parcels than a developer would be willing to pay. Leland estimated a housing, retail and office developer seeking market-rate profit would be willing to pay $205,000 to $272,000 per acre of land. But many owners of the Glenwood properties have told the city they want far more than that - on average about $1 million an acre.

The report concludes that market conditions in Glenwood and the Eugene-Springfield area don't bode well for the mix of housing, shops and offices the city hopes to see built in Glenwood. But by proceeding carefully with a few offices and retail stores on a small part of the 48 acres, the Glenwood vision could be realized within 10 to 20 years, Leland land use consultant Chris Zahas said.

Zahas on Wednesday said the report's findings are "a mixed bag" for city officials seeking to turn the gritty district into a lively neighborhood and riverfront destination. Zahas will review the study next month with the Springfield Economic Development Agency, which oversees the city's urban renewal program for Glenwood.

The price of progress

One of the chief obstacles to getting the ambitious riverfront project off the ground involves persuading Glenwood property owners to sell their land to the city or a private developer.

Since 2005, the city has spent $81,000 to secure purchase options with owners of about 36 acres between Franklin Boulevard and the Willamette River. The options gave the city the right to buy the properties for set periods of time at prices specified by the owners.

Zahas said his firm recommended that city officials allow those options to expire because owners were asking too much for their properties.

"The options (the city) secured really aren't usable because the prices they locked up on the land can't work for a developer," Zahas said.

But, Zahas added: "The good news is that there is a market for (retail, office and housing uses in the targeted site), and if you can acquire the land and move forward with other projects, you've got a potentially viable project. But somebody has to acquire the land."

Often in urban redevelopment cases, the government is willing to step in, using tax dollars to assemble land, and then pass it along at a discounted rate to a developer. That's one option Eugene has looked at for redeveloping the downtown Broadway strip.

Springfield hasn't aggressively negotiated with Glenwood property owners, so it's not clear what the owners' bottom line is. But some have asked for very high prices.

One Glenwood property owner, Taylor Ramsey, asked the city for $1.6 million for the 1.9 acres of developed property he owns along Franklin Boulevard. And the Roth family, which owns 7 acres that includes Roaring Rapids Pizza, agreed to sell their site to the city for $17.5 million, or $2.5 million an acre.

Options to buy expire

The city's options on the Ramsey and Roth properties - along with 10 others the city had secured with Glenwood property owners - expired in March and May. The city has unexpired options with seven other land owners in the riverfront district.

The bottom line, Zahas said, is that if the city exercised any of the options at amounts proposed by property owners, it probably would have to sell them to a developer at the much lower market rate.

John Tamulonis, Springfield's community development manager, said Glenwood land owners who signed deals with the city in 2005 and 2006 understood from the outset that their asking price could ultimately be too high.

`We told them, `You can put down any number that you want, but in the end, it might not be feasible,' ' Tamulonis said. "Each one of them said they understood that could happen."

Even though the city has allowed most of the option agreements to expire, the value in getting land owners involved in the process and finding that they are willing to sell is significant, Tamulonis said.

"If they expire, (property owners) understand it's at too high a price," he said. "We needed the market study to get this conversation on a more reasonable plane."

Ultimately, properties not acquired through city-executed options could be purchased through owners' direct negotiations with a developer, Tamulonis said.

Infrastructure and vision

The report lists other tasks that need to be done before widespread redevelopment, including annexing and rezoning portions of the now unincorporated Glenwood community into Springfield, preparing to build new roads and sewer lines in the 48-acre district and improving properties on the south side of Franklin Boulevard.

The consultant's report recommends that the project's first phase - expected to take four years to complete - should include offices and some retail outlets spread over 10 to 12 acres. Housing should not be built until later, Zahas said, because consultants do not expect homeowners would be interested in Glenwood's riverfront district until after they see surrounding improvements sparking positive change in the community.

"People aren't going to want to move there unless they are sure the area is turning around," he said.

Tamulonis said the report sheds some light on what needs to occur in advance of any major changes in Glenwood.

"What the market study does is puts a dose of reality on things and provides us with what might need to be adjusted in the market to make the development happen," Tamulonis said.

Last November, the economic development agency's board of directors - which includes the full Springfield City Council and two Lane County commissioners - authorized city staff members to prepare a development agreement with Apex Investment Group of Portland.

Apex asked that the city complete a market feasibility study before negotiations between the city and the firm aimed at determining responsibilities of each side as redevelopment in the area proceeds. Tamulonis said negotiations will begin after the development agency's board reviews the study.

If a deal is reached, Apex would work with the city to institute aspects of the Glenwood Riverfront Plan, a city-approved outline for redevelopment of an area that is now home to auto repair shops, used car lots and various other commercial and industrial shops.

The plan calls for creating a neighborhood where residents of riverview apartments and condominiums can also work, shop and spend time along the waterfront.

POTENTIAL AND PROBLEMS

Leland Consulting Group's study of a 48-acre section of Glenwood lists characteristics that will affect redevelopment.

Positives:

Willamette River frontage

Centrally located between downtown Springfield, downtown Eugene and Interstate 5

Developer with "significant financial capability" has expressed interest

Negatives:

Fractured ownership

Property owners asking for more than what developers would be willing to pay

Extensive land use regulatory issues still need to be dealt with

Much of existing Glenwood development in "substandard condition"

No high-quality offices have been built in Glenwood

No high-quality dense urban housing has been built in Glenwood