City considers changing annexation agreement

A property annexed into the city limits in 2006 - which has remained undeveloped for more than a decade - may soon be governed by a new set of rules.

A public hearing will be held Wednesday, May 24, at 6:45 p.m. at City Hall regarding a request to revise and restate an annexation agreement regarding McKenzie Meadow Village, located at 1680 W. McKinney Butte Rd.

The property was annexed into the city by a public vote in 2006, subsequently receiving approvals for an original annexation agreement in 2009 and two later revisions in 2010 and 2011 to reflect infrastructure improvements, made by the owner, and refined development plans.

Thus began a long and costly journey through approvals for a comprehensive plan and zoning map revision, master plan, preliminary subdivision plat, master plan modification, site plan, and multiple extensions to the master plan and subdivision plan. A number of these approvals have now expired due to delays caused by multiple formal appeals by a third party, including filings with the State of Oregon Land Use Board of Appeals.

In 2011, the City approved a site plan for an 82-unit assisted-living facility and a maintenance building on the property. The property owner had contracted with Yakima-based Pinnacle Alliance Group to develop the assisted-living facility, to be called the Lodge at McKenzie Meadow Village. The repeated inability of Pinnacle to secure financing for the Lodge project resulted in delays for the overall development of MMV due to overly prescriptive terms of the annexation agreement.

As currently written, the agreement requires that a senior-living facility be developed before any additional development can occur on the property. After multiple contract extensions, when Pinnacle failed to secure financing, the contract with them was eventually not renewed and a new agreement was reached with a Bend developer to build the senior living facility.

What followed was a series of legal challenges by Pinnacle owner Mark Adolf to the application to develop a senior/assisted-living facility at MMV. At the same time, Pinnacle received land use approval to build an assisted living facility on another site in Sisters. MMV owners believe that Pinnacle will continue to create legal obstacles to the development of a senior living facility at MMV. At this time, Pinnacle's development process sits idle.

Subsequent to the original annexation agreement in 2009, Sisters has continued to grow, housing prices have continued to escalate, and the housing supply continues to fall short of what is needed. The rental vacancy in Sisters is very low and the availability of residential lands is decreasing while the demand for housing is increasing.

The requested amendment to the annexation agreement is primarily focused on three aspects: The requirement to provide affordable housing at a minimum rate of one unit per 10 dwelling units would be retained, but the prescriptive nature of how the units are provided would be removed. The affordable-housing provisions dealt with affordable senior housing, called for affordable units to be "evenly distributed" throughout the property, and related to housing sizes, styles, and design types.

Since annexation, affordable-housing needs in Sisters have continued to increase, affordable-housing providers and funding sources have changed, and the ability to provide senior housing (affordable or standard market rate) has proven to be extremely challenging.

Currently, housing for all age categories is needed in Sisters. Although there are benefits to spreading affordable housing units throughout the site, providers can more efficiently secure funding and provide housing when economies of scale are realized from adequately sized projects. By removing the prescriptive affordable-housing elements, more flexibility in design is possible and housing is expected to be provided as quickly and efficiently as possible. The one-in-10 requirement would be met through the required master planning process.

Since annexation, MMV has been rezoned to include a 1.8-acre open space and the City's Parks Master Plan has been revised to identify a park in the open space zoned area. The proposed amendment would remove the rigidity of a "designated and dedicated public park," and instead, provide the option of a park/open space that is publicly available, but maintained via a different mechanism, such as an owners association.

The City currently doesn't have the financial resources to maintain another dedicated public park, and would prefer that the public park requirement be removed. By removing the language and allowing it to be provided and addressed in the master plan process, the needs of the City would be accommodated and the owner would be provided flexibility in design. Maintenance of the future park/open space would not be the responsibility of the City.

The proposed amendments are intended to recognize changes in the community since the original annexation. The amendments would also allow efficient development of MMV and housing provided as intended by the City's comprehensive plan and required by the City's development code.

The proposed amendment spells out clearly the provisions regarding affordable housing, water rights, infrastructure, master plan, and open space. It recognizes the changes in circumstances identified by MMV and changes in City needs that warrant revising the original annexation agreement to bring it current.