Tony's Town & Country building

Tokola Properties is no longer interested in redeveloping the former Tony's Town & Country, above, located downtown at Second and Federal streets.

Tokola Properties is no longer interested in redeveloping the former Tony’s Town & Country building downtown, but still hopes to do some kind of development in The Dalles, a city official said.

Steve Harris, director of the community development department for the city of The Dalles, said the city received a letter from Tokola May 21 saying it was withdrawing from the project, which envisioned tearing down the current building and replacing it with parking, retail and housing.

The city proposed a partnership with Tokola that had the city's urban renewal agency contributing about $1.8 million to the redevelopment project. That level of public contribution to a private project triggered a state requirement that the developer pay so-called prevailing wages, or wage rates set by the state for public works projects. The rates are typically higher than what is paid for private projects.

The urban renewal agency and Tokola twice appealed that requirement, made by the Oregon Bureau of Labor and Industry (BOLI), but lost both times, Harris said.

While prevailing wages and non-prevailing wages are close in a lot of trades, there is still a difference, and Tokola estimated it would add $1 million to $1.5 million to the project to absorb prevailing-wage costs, Harris said.

“We did have some conversations about what the agency could do, how we could restructure things in the long run,” Harris said “Tokola said they just weren’t interested in building a prevailing-wage project, that it didn’t fit with their business model.”

Tokola is still interested in doing some kind of development in the city, Harris said, and a staffer has worked with them as they look at vacant property, since anything with a building on it is more complicated.

Several calls to Tokola seeking comment were not returned.

The Gresham-based real estate developer proposed building a four-story, $12 million project that would have 1,500 square feet of retail at the front of the first floor and parking at the rear and then three stories of apartments, totaling 69 units.

The proposal was that Tokola would acquire the city-owned parking lot behind the building, which has 32-34 parking spaces. That entire area would have become the footprint of the new building, Harris said.

The city’s share would have included the value of the building when the city bought it, the value of the land, testing and utility work, Harris said.

State law states that anything over $750,000 of government contribution to a project could trigger prevailing wages.

Certain costs, such as for fees and system development charges, do not fall within that $750,000 limit, Harris said. The city sent its information to BOLI in early 2018 for a wage determination.

When the answer came back that it was prevailing wage, the agency and Tokola appealed at a hearing in late December 2018.

They could’ve appealed it further, but it was decided that “even though we were fairly comfortable that we met all the qualifications and based on past actions and determinations by BOLI it was determined not to pursue another appeal,” Harris said.

The city’s Columbia Gateway Urban Renewal Agency bought the building in 2015 for about $450,000, and then asked interested parties to submit proposals for redevelopment.

Tokola responded and entered an exclusive negotiating agreement in early `2016. Such agreements take the property off the market while a developer does due diligence on the property.

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