Rick Mikesell received two more years to try to hold up his end of a bargain with CARA by getting a restaurant into the historic J.C. Penney Building, 317 First Ave. W., that Albany's urban renewal district helped him renovate for a public-dollar price tag of $742,500.
The Central Albany Revitalization Area advisory board voted 8-1 with one abstention Wednesday to grant the extension to Mikesell's Albany company, R3 Development. A 2008 agreement between R3 and CARA called for the firm to have a 200-seat, lunch-and-dinner, minimum-five-day-a-week restaurant in the building by Dec. 31, 2013, or pay back a $200,000 no-interest forgivable loan that was part of the overall CARA contribution.
After about 45 minutes of discussion, board members Rich Kellum, Kevin Manske, Russ Allen, Bill Coburn, Sharon Konopa, Rich Catlin, Dick Olsen and Bessie Johnson voted to support giving R3 two more years, after which the repayment issue would be revisited if no restaurant was in place.
Maura Wilson abstained from the vote after arriving at the meeting late, and Ray Kopczynski voted no; Kopczynski had suggested charging Mikesell's company interest on the $200,000 during the extension period, but a no-interest motion was made, seconded and approved instead.
In 2008, Mikesell and two partners paid $425,000 for the now-99-year-old building, which the Penney company operated out of until 1988. Mikesell said Wednesday that both partners dropped out within a year, "mainly for not having resolve for the amount of money it would cost, even though we had a budget up front."
"At the time of the loan, there was no way to predict the difficulty and limitations of lending for start-up investors," he wrote in a May 23 letter to Urban Renewal Director Kate Porsche. "R3 spent well over $200,000 in infrastructure in preparation for a restaurant tenant. The front operational windows, a grease trap system, additional power, and a ventilation system are already in place as we attempt to place a restaurant in the space."
Porsche on Wednesday remained steadfast in her support of Mikesell's work, the extension and the restaurant requirement.
"The idea is to create a cluster of restaurants, a way to bring outsiders and their money to our community," she said. "Restaurants do that, the carousel does that. The more great restaurants there are in a proximity, the better it is for everybody."
Mikesell reaped praised from Konopa and Catlin as well but faced sharp questions and comments from Kellum and Kopczynski.
"This is no different than any other owner that's made a poor choice in bringing their building up to standard," Kellum said. "You went into it knowing this is what it was. I would not be in favor of just giving the money at the end of the time (if there's no restaurant in place); I don't think it's good for Albany."
"A lot of people, if they got into this situation and lost two-thirds of their funding, they wouldn't have seen this accomplished," Mikesell said. "I've accomplished what I set out to do minus the restaurant."
Mikesell added the building is 65 percent leased and would be full without the restaurant requirement; he said not being able to lease the main floor to anything but a restaurant costs him rent income at the rate of nearly $140,000 per year.
"It would be easy to lease it up today," Mikesell said. "I really thought I had one (a restaurant operator) a couple years ago that owned some other restaurants downtown, and I can't really give an answer why they didn't come. I need to do a better job. When I see one open downtown, I kick myself. I don't think I've done the best job I could've done marketing it. I got dejected by the economy, the lack of anybody trying to start a business. I need to increase my focus. Realistically, there's no hurdles from the building standpoint. I just think it was timing, and within the last 12 months it was my focus."
Mikesell noted he owns two buildings in downtown Bend and also buildings in Eugene, Las Vegas and Palm Desert, Calif.
"I have better places to invest my money," he said, "but (the Penney building) is more personal. Let's give it two years and come back -- I don't expect it to take two years. I'm disappointed I didn't come through. I hope nobody takes it as I'm trying to skate on something. I had the choice to rent it (to a non-restaurant) and pay you back, and I still have that choice."
Konopa, Albany's mayor, said she was one of those who pushed for the restaurant requirement in the original agreement and had been considering suggest its removal before hearing Mikesell's continuing support of it.
"This project has been worth every dime we've spent," she said. "We get a historic building that citizens will be able to access and see for another 100 years. We really appreciate this project; it's a beautiful building."
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