City planning to buy former site of Kmart

Oregon plans to buy the former Kmart site on Navarre Avenue, ending a lease-purchase agreement with the owner negotiated in 2019.

The lease was good for up to 10 years, with a $3.7 million purchase option at its conclusion.

Oregon City Council will consider next week an ordinance authorizing the issuance and sale of bonds for up to $4.5 million for the purchase.

“We actually save ourselves money in the long run by purchasing it outright now,” City Administrator Joel Mazur said.

Oregon’s current monthly lease payment of $23,505 will escalate next year to $25,641, Mr. Mazur said.

The $3.7 million balloon payment in 2029 would be on top of all the monthly lease payments until then.

In adition to the long-run savings, buying the land outright shows potential developers Oregon is progressing toward property ownership, the city administrator said.

“In order for them to get financing to construct the project and to secure tenant leases, they need to be able to show we’re progressing toward purchasing the property outright so there’s enough confidence and less risk for the tenants and the lending institutions,” Mr. Mazur said.

Proceeds from a tax-increment financing district on the property will go toward paying off the 30-year bonds to be issued.

“That’s why getting development happening on this property is so important,” Mr. Mazur said. “Once we go to this step, the development is key to paying back the bond debt service.”

A TIF is a public financing mechanism available to local governments to pay for improvements that support development. Proceeds from the Navarre TIF are estimated to be over $50 million, Mayor Mike Seferian said.

The city recently terminated an agreement with the project’s previous developer, Fairmont Properties, and hired River Rock Property Group, a local firm that redeveloped the former Holiday Inn French Quarter property in Perrysburg.

“Our goal right now is to make this real,” Mike Denman, an owner of River Rock, said at the meeting. “This is the first step to make this real.”

Plans at the 12.4-acre site have called for mixed-use development as part of the city’s downtown center project off Navarre Avenue and Pickle Road.

Oregon previously bought 30 acres behind the Kmart site for $1.4 million to develop an apartment complex and single-family homes as part of the downtown center project.

The city is anticipating a groundbreaking date soon on the apartment buildings and residential properties, Mr. Mazur said.

Contact Kelly Kaczala at

kkaczala@theblade.com.