(SCP Redmond lobby | Photo courtesy of Alpha Wave Investors, LLC)
Development of commercial and industrial properties in Dechutes County should continue smartly into 2020, and the Redmond area will play a major role in that development.
Damon Runberg, regional economist for Oregon Department of Employment, reported earlier this month that 40 percent of the county’s job growth from June, 2018 to June, 2019 occurred in Redmond — 890 jobs — but currently the city has only 18 percent of the County’s employment.
Runberg foresees Central Oregon’s job growth next year to be about two percent by year-end compared to about 3.5 percent in the current year. The Economist magazine forecasts the United States’ GDP for 2020 to be 1.6 percent, so the region notches ahead of other regions.
Bruce Barrett, President, Redmond Economic Development, Inc. (REDI) says, “REDI has a four-year strategy plan customized to accommodate more of the job growth in the city already underway.”
REDI has an agreement with the city of Redmond to thoughtfully plan for commercial and industrial development, which can provide family wage jobs based in traded sector businesses.
Barrett says REDI’s Strategic Plan calls for advocacy of infrastructure development and maintenance of adequate industrial land inventory, with an encouragement for developers to build ‘shovel-ready’ industrial parks to accelerate time for commercial and industrial businesses to locate and fuel the jobs they provide.
Roger Lee, CEO of Economic Development for Central Oregon (EDCO), says that in Bend in 2019, 35,000 square feet of industrial spec development has been built, and 301,600 square feet of future inventory is “in process,” meaning it is in the planning and permitting stage or currently under construction.
EDCO is a private, nonprofit organization that for nearly four decades has worked behind the scenes to help move and grow established manufacturers, tech and professional businesses to Central Oregon that export a majority of their goods or services outside the tri-county area.
Back in Redmond, it has a vibrant urban renewal program stimulating downtown commercial properties, businesses and pedestrian traffic.
Chuck Arnold, City of Redmond’s Economic Development/Urban Renewal Program Manager, says, “Our 2019 noteworthy commercial and industrial projects include the historic Redmond Hotel, High Desert Music Hall, Kingwood Apartments and Vine & Tap Wine Bar. Sixteen new businesses have opened in downtown this year.”
Arnold adds, “Redmond has in its urban renewal program the Professional Business/Medical District; and there we see the expansion of the Central Oregon Medical Building. Further, connecting downtown and the medical district will be a new 47-unit workforce housing development.” This District is near St. Charles Medical Center.
“SCP Redmond” is the new name for the historic old Redmond Hotel, and it is the current centerpiece of the downtown rejuvenation, Arnold says. Alpha Wave Investors, LLC utilized government-sponsored Opportunity Zones (OZ), which were created by the Tax Cuts and Jobs Act of 2017 for new investments in targeted areas. OZ is aimed to incentivized investors with capital gains tax relief. (See accompanying article on how Alpha Wave Investors, LLC incorporated OZ to create SCP Redmond starting on page 1.)
Barrett, foreseeing the momentum in industrial and commercial development and attendant construction says, “Raised in Redmond, I am a natural cheerleader for my hometown. And my experience with REDI and as a member of the County Budget Committee gives me a current assessment of our regional economy. I believe Runberg’s review of job growth in Redmond will continue into 2020, and industrial and commercial development, supported by City Hall, will be the driver for more job creation.”
Alpha Wave Investors Considered Economic Strength of Region in Underwriting SCP Redmond
A guest who walks into the freshly renovated SCP Redmond — the former Redmond Hotel, which is on the National Register of Historic Places — will experience a “back to the future” ambience.
Two years ago, Alpha Wave Investors (AWI) purchased the hotel and began renovation. Ken Cruse, co-founder and CEO of AWI, says, “When we initially underwrote the Redmond Hotel, we considered the quality of the asset, the economic strength of the region and the cost of the needed renovation.”
Cruse explains that AWI’s concept of “back to the future is, “SCP (soul, community, planet) seeks to provide fair-priced lodging, co-working and fitness experiences centered on the values of personal wellness, social good and the environment…Our custom lodging (typically well-located, reimagined vintage hotels and motels) merges earth-friendly and socially responsible practices with healthy accommodations…”
The purchase and renovation of the hotel cost almost $12 million, and AWI sourced financing other than its own.
As Cruse notes, “The OZ program — which is one of several outside sources of support we accessed — is one of the most attractive tax provisions we’ve seen. It’s almost as if the OZ program was set up specifically for properties like the Redmond Hotel — well-located assets that are in need of substantial investment, but in markets where the demand is not yet sufficient to support traditional, non-tax-advantaged investments.”
Cruse says, “The City of Redmond has a progressive mindset and an exceptional downtown urban renewal program, which was instrumental in helping us to bridge the cost gap.”