Court of Appeals Affirms TimberMill Shores Permit

Conceptual Rendering of the proposed DHS facility located inside TimberMill Shores, Klamath Falls. (klamathfallsholdings.com)

Press release from Rubicon Investments

This morning, the Oregon Court of Appeals affirmed LUBA’s denial of Sky Lake’s primary objection to the new DHS Facility to be constructed at TimberMill Shores. The court concluded that:

“Although petitioner [Sky Lakes] vigorously argues for a different reading that would place more weight on other provisions of the CDO than did the city, those arguments do not persuade us that the city’s interpretation is an implausible one. In other words, nothing that petitioner points to in the CDO demonstrates that the city was compelled to interpret its ordinance in the manner advocated by petitioner, or that the approach adopted by the city was unreasonable in view of the text and context of the CDO. Consequently, LUBA correctly determined that it was required to accept the city’s interpretation. Siporen, 349 Or at 266. Accordingly, we must affirm.”

“Sky Lakes is now zero for five on legal tribunals related to this development” said Daniel Bunn, CEO of Rubicon Investments. “We know they have unlimited nonprofit hospital dollars to delay the project, but we’re finally reaching the end of the line.”

With the social service question definitively resolved by the court, the Klamath Falls City Council is now free to clarify a minor question related to traffic impacts of the project as directed by LUBA. “The next step in the process is for the City Council to write additional findings on the traffic impact of KBBH. While sub-tenants were accounted for in the traffic study, LUBA has asked for some more discussion. We’re talking about the impacts of 3 additional employees, so there won’t be any material change to the findings” said Mr. Bunn.

Sky Lakes Involvement

These numerous appeals and rulings are part of a long battle Sky Lakes has been waging regarding the Department of Human Services (DHS) lease contract that was awarded to Rubicon Investments in February of 2018. Sky Lakes picked up this battle on behalf of Klamath Works and Sky Lakes’ 50% land ownership in a proposed alternative site. Many members of the Sky Lakes Board are personally or financially tied to KW Campus, LLC (the landowner) and Klamath Works (the job program).

“It’s been clear for some time that Sky Lakes’ motivation is financial rather than a general concern for the land use process. As a not-for-profit hospital the public should be holding the Sky Lakes Board accountable for how they are spending donated money and assets. They have spent a lot of time and cash fighting to get our project disrupted and they can afford to do so because they don’t pay property taxes on their medical facilities.” said Justin Hurley Braswell, Chief Operations Officer for Rubicon.

Regardless, Rubicon is moving forward with the development. “We’ve completed our architectural plans and have submitted for our building permit,” said Hurley Braswell. “We’ve won on the merits at Klamath Falls Planning Commission, City Council, LUBA, and the Court of Appeals– it’s now just a question of how long Sky Lakes plans to delay the inevitable.”

It is unkown the amount of money that Sky Lakes has diverted to on the appeals against Rubicon Investments, the City, and the State of Oregon, but a conservative estimate places it well into the six-figure range.

Sky Lakes and Spruce Street Ventures, LLC, both 50% owners for a previously proposed site for the DHS building at the Klamath Works Campus that was not accepted, would have benefited financially had it been accepted. Since their proposal was significantly more expensive in addition to being an inferior location (pursuant to State siting standards), the State chose to select the TimberMill Shores site, offered by Rubicon Investments. It is worth noting that Spruce Street Ventures, LLC is owned by Mark and Rod Wendt. Rod Wendt is the Vice Chair of the Sky Lakes Board. His brother Mark is also the owner of Diversified Contractors, a general contractor that has been listed on over 3 million dollars worth of valuations at the Klamath Works Campus to date, paid for primarily by Sky Lakes, according to awarded permits. Additional conflicts with the Sky Lakes Board and the Klamath Works Campus are all too evident.

Procedural History

In February of 2018, Rubicon Investments was selected in a public bid process as the developer for a new Department of Human Services Regional Office, for the State of Oregon, in Klamath Falls. The lease was then signed in March of 2018.

On October 8, 2018, Klamath Falls, Planning Commission approved a Conditional Use Permit for Klamath Falls Holdings, LLC (a wholly owned subsidiary of Rubicon Investments Corporation) to construct a Government Office building at the TimberMill Shores development. Sky Lakes Medical Center appealed the Planning Commission decision to the Klamath Falls City Council.

On January 7, 2019 Klamath Fall City Council heard testimony by Klamath Falls Holdings, LLC, Sky Lakes Medical Center, Klamath Works, and public participants on the appeal. The City Council then upheld the Planning Commission decision to award a Conditional Use Permit for a Government Office building. Sky Lakes then appealed the City’s decision to the Land Use Board of Appeals. In its brief, Sky Lakes argued that the building’s use was Social Services. However, the City voted to categorize the use in the same fashion as every other Department of Human Services across the State and currently in Klamath Falls, and classify it as government office as specified in the City Code.

On May 24, 2019 LUBA rejected Sky Lakes’ principal arguments and affirmed the Council’s decision that the building is correctly categorized as a Government Office. Sky Lakes appealed again, this time to the Oregon Court of Appeals. The same arguments were presented, resulting in the same conclusion that the Planning Commission, City Council and LUBA had issued.

Project & Rubicon Investments

Rubicon Investments, who filed for their building permits on May 10th, plans to break ground on the new DHS Regional Government Office, at TimberMill Shores once the permits are complete. Pence Construction, a Portland based general contractor, and TVA Architects will work with the developer to see this project through completion, with expected completion, date of June of 2021, due to current delays by Sky Lakes.

Rubicon Investments, a fourth-generation family owned company based in Medford, intends to hold the project on a long-term basis after completion.