June 13, 2002 11:00 pm

By Ray Linker

Observer Staff Writer

Finally, it's official!

ODS Health Plans has reached agreement with Safeway to purchase the grocery company's vacant building and land at Fourth Street and Adams Avenue. The company plans to turn it into a $6 million retail/office complex that would also house the city library.

"It's what we've been waiting to hear," La Grande City Manager Wes Hare said.

"The papers haven't been signed, but there has been a ‘handshake' agreement between ODS and Safeway, and they are proceeding with the design work," Hare said after talking with ODS' Andrew Franklin late Thursday.

The two principals agreed on the price in January, Hare said, but other details had to be ironed out. The sale price was not revealed.

The city has set aside about $700,000, has received $100,000 in donations and will seek grants for its share of the project.

ODS, which has offices a block away at the corner of Adams and Chestnut Street, plans to form a public-private partnership with the City of La Grande and the Oregon Employment Department. Other space could be rented to retailers.

The Rock Bowling and Fun Center on Albany Street, whose owner, Steve Rzonca, has held meetings with the city and ODS officials, is not entirely out of the picture, Hare said. Rzonca wants to retain the old Safeway building for a new bowling alley, but his plan would involve using the Sub Shop location owned by the city and an adjacent parking lot as part of the complex.

"ODS is still willing to consider any proposal from Steve," Hare said. The city manager said he understands meetings will be set up soon between ODS officials and Rzonca.

ODS, through Hare, has indicated it wants to tear down the old building and put up either one or two others, totaling 40,000 square feet, in an "L" shape, one facing Fourth Street and the other facing Adams Avenue. There would be room for other retail outlets and such things as a medical clinic. Parking would be behind the building. No definitive plans have been drawn.

The city would use 20,000 square feet of space for the library. The present library on Penn Avenue, built in 1913, has 7,920 square feet.

ODS, which serves 750,000 clients statewide with medical and dental insurance benefits, will build either a one- or two-story building, said Hare. Also being considered is the possibility of two separate buildings, but one structure seems the more logical, Hare said. "We could have one main entrance, one elevator, shared conference or meeting rooms, shared bathroom facilities," he said.

Safeway vacated the store there on Dec. 4, 2001, opening the next day in its new 55,000-square-foot store at Adams Avenue and Willow Street.

"There is no definite timeline, but I hope that we can begin work quickly," Hare said of construction plans. "All partners have discussed it. ODS has a design consultant to see what each partner will require.

"ODS has stressed it will be an attractive facility, aesthetically better."

ODS has 5,000 square feet of space at its present location, which is owned by Verizon. A new building would double its space, meaning additional employment for

La Grande, Hare said. Franklin, who has preferred that Hare speak publicly for him on the project, has not indicated when or if employment would increase. ODS, which located an office in La Grande more than two years ago, employs more than 50 people in its claims processing and customer service center.

Bob Nelson, the Employment Department's director, has wanted to move from his present building at 1901 Adams Ave. but wanted to remain in the downtown area to be accessible to clients, he said.

The city's library commission, which has been searching for a new site for several years, previously said the Safeway site was one of its preferred locations for a new library. What will happen to the present 8,000-square-foot ancient library hasn't been determined.

The City Council voted 6-1 in May 2001 to make an offer to Safeway on the site. The city was interested at that time in pursuing it for a library. Then ODS stepped forward, with the city's blessings, and began negotiating to buy the property.

It won't be a cheap venture for the city, Hare said.

"I'm sure we could go out and find bare ground to build a library on and do it cheaper. But this plan enables local businesses, a state agency and the city to work together. We're seeing a business (ODS) willing to invest in La Grande in terms of a new building big enough to provide for expansion of the work force."

Hare said the city could finance its share of the project with reserve funds, grants and a large private bequest from an anonymous donor. "It's the city's intent to own our share of the building. It may be that, in the short term, we will have to lease until we can get all our financing in place."

While some merchants have said they wanted to see the Safeway site retained in retail businesses, Mayor Colleen Johnson described the proposed project as "an important opportunity to improve the city's downtown by adding an attractive new building, new jobs and a 21st-century library."

Nelson said locating his office next to the public library would help both job seekers and library patrons.

"We should be able to offer better access to current job information as well as training materials," Nelson said.