City OKs Sale for ‘Beer Library’ Concept, Despite Opposition

Despite the unanimous approval of the city council, a proposal to sell the Canby Public Library to be redeveloped as a brewpub, cidery and family-friendly arcade was not without controversy Wednesday night, with several prominent community members testifying in opposition.

Oregon City Brewing Co. has offered to purchase the building for $500,000, with the city also chipping in a $200,000 Oregon Main Street Revitalization grant that was awarded to the property.

The offer was far below the $950,000 the building was appraised at several years ago, but city leaders supported the project because it closely fit their vision for an active destination establishment that would draw visitors to the downtown core.

Plus, they know the property needs work. Officials were aware the roof was in need of significant repair, but they were still surprised when new City Administrator Scott Archer’s initial site visit was interrupted by water leaking into the building.

O.C. Brewing estimated the price tag for their remodel of the former library at $2.2 to $2.3 million. Estimates for an earlier, seemingly less ambitious plan by the city to redevelop it as a public market topped $3 million.

The proposal garnered the support of Canby staff — which worked on the city’s behalf to negotiate the deal with O.C. Brewing — and was enthusiastically received by many residents on The Canby Current‘s Facebook page last week.

But not everyone was thrilled about the sale — or the process that led to it. Peter Hostetler, owner of Equipment NW and former vice president of local construction firm KHC Inc., questioned the timing, the asking price, the listing and whether the whole business was in the best interests of Canby citizens.

Hostetler claimed the city had failed to aggressively market the property — or even list it on commercial real estate marketplaces like LoopNet and CoStar — and may have violated state laws by not noticing the sale in a local newspaper (though staff said it was placed in The Oregonian due to publishing deadlines).

“A hasty proposal period that wasn’t advertised by state statute is illegal,” he said. “An opportunity not advertised on platforms where buyers are looking for commercial real estate is negligent. The public demands more from their elected officials to steward public property well.”

Hostetler noted that the former Canby Herald building, another downtown Canby property, sold in August 2019 after being marketed aggressively on commercial real estate platforms for less than a week, and for the full asking price of $375,000.

The former newspaper offices contained only about a quarter of the square footage of the library building, he added.

“The public demands that this property be marketed conventionally by professionals to get the best price for the only 10,000-square-foot-plus building downtown that’s available,” Hostetler said.

“There should be no problem getting reasonable offers for businesses that benefit the community. You might still get a beer library without having to sell at a substantial loss to the public wallet.”

Hostetler and another commenter, James Hieb, who nearly won a seat on the Canby City Council last November, expressed concerns that nothing appeared to be preventing O.C. Brewing from buying the building for $500,000, plus a $100,000 promissory note maintained by the city, “flipping” it through a commercial Realtor for close to $1 million and still walking away with a substantial profit.

In response, Archer and City Attorney Joe Lindsay assured councilors that the process undertaken in this case was legal, reasonable and commonplace.

Listing the property on a commercial real estate marketplace was also an option the city could have pursued, Archer allowed, and it may have resulted in a higher selling price — but it would have been at the cost of the city having less say in the type of business that ultimately occupied the space.

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Using the request for proposal process allowed the city much more control over the future of the property than a seller simply seeking the best price, officials explained.

“The council made decisions … to go about this process in a specific way so that you could have a say in what happens at the property, versus simply putting it up for sale to the highest bidder and having essentially no control over who or what ends up in the building,” Archer said.

Finally, Mary Hanlon, founder and principal of Hanlon Development — which is the managing member of the Dahlia and is leading the redevelopment of the Canby Civic Block — criticized the sale and the process, saying she believed the city had failed to uphold its end of their public-private partnership.

“The communication around this has been disturbingly poor,” she said. “People have just been operating in the dark. Just this week, I learned that this item was on the agenda. It’s been privately negotiated behind closed doors, … and it’s a project that directly affects what we’re doing at the Civic Block.”

The Canby Civic Block, on the other hand, followed an exhaustive, thorough and entirely transparent public process and has delivered on what it promised, bringing more than 100 new residents to the downtown core and attracting several new businesses, including Wayward Sandwiches, B’s Bake Shoppe and Dahlia Home & Garden.

The city’s economic investment in the partnership has been returned at least tenfold, Hanlon said.

Hanlon Development has also, for years, been seeking to place a brewpub at the Canby Civic Block — most likely in the former police station. For the city to negotiate a deal with one at its own property half a block away felt, to Hanlon, like a slap in the face.

“I’m very disappointed that we were not informed about this,” she said. “I would have spent my energies over the past year in a very different way.”

But Lindsay argued the city had kept, or even exceeded, every point they had agreed to in their contract — which contains no “non-compete” clause saying officials would not partner with businesses that the Civic Block might covet. He also contested that the process had been done in the dark.

“Having not zero but three different moments of expressions of interest over the last four years, at what point did anyone in this community not know that we were looking for a suitor for this building?” Lindsay asked incredulously at one point.

The city attorney also argued that the Beer Library would do more to help downtown businesses, including those in the Canby Civic Block, by way of the theory that a rising tide lifts all boats.

“[Oregon] Main Street’s position on this is that more is more is more, and it’s synergistic,” he said. “So, you activate a whole downtown, and letting some building lie fallow next to what you’re trying to prove is vibrant is actually a worse strategy than filling it up with something cool.”

In the end, the vote to approve the sale to Oregon City Brewing Co. was unanimous. The matter must come up for a second reading in two weeks to become official.

O.C. Brewing owner Bryce Morrow told the Current last week that they hope to hit the ground running and have the bulk of construction completed by April 2022.

Watch the full discussion from the Feb. 3 Canby City Council meeting below:

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