By Joseph Ditzler

The Bulletin

Visible to passing motorists from the Bend Parkway, a four-story cinder block structure rising on NW Lake Place is becoming a local landmark.

Hannah Kellogg, the principal behind property owners Dry Heat LLC and Verdant Ventures LLC, plans a recreational marijuana dispensary on the first floor and six short-term vacation rentals, three each on the second and third floors. SunWest Builders broke ground on the building — when complete a total 11,300 square feet — on Oct. 3, said Wayne Powderly, senior project manager at SunWest Builders.

The rentals, two two-bedroom units and four one-bedrooms, will measure from 540 square feet to 790 square feet, according to documents filed with the city Community Development Department.

The fourth floor will be an open-air gathering place with a fireplace and a roof, “kind of a hang-out area,” Powderly said. That, Kellogg said, is “the part I’m really excited about.”

Powderly said work should be complete by Memorial Day. The exterior will be covered with Hardie-brand siding, he said. Kellogg said the building would be ready for business in June.

Kellogg said two other businesses in the neighborhood at a public information gathering objected to a dispensary opening near them. Kellogg said she pointed out that she lives nearby, so is also concerned with livability. The building will have the security systems required of marijuana dispensaries by the Oregon Liquor Control Commission and a security guard.

“It’s about to become the most secure corner on the block, and if they find out anything different to let me know,” Kellogg said. “I want it to seem like this is a positive thing.”

The project was originally scheduled to start in 2016, she said, but opposition raised by a neighboring business about increased traffic imposed a delay. In May 2016, Griffin Heating and Cooling owner Dennis Griffin wrote to Kellogg, stating that the project would create problems for traffic flow, safety, ingress and egress on the street, which dead ends at the parkway. Powderly said the issue was resolved; the city staff review indicated the site will have adequate parking and space for vehicles to maneuver without backing onto Lake Place.

City planning documents show Verdant Ventures plans a 14-spot parking lot. Kittelson & Associates Inc. updated its 2016 traffic study in March and estimated the retail shop and the rentals will generate 107 trips on and off the property each day, according to the city plan review.

Twenty-one cannabis retailers are licensed by the Oregon Liquor Control Commission to do business in Bend, not including Kellogg’s Verdant Ventures. She has not yet applied for a retail recreational marijuana license, said OLCC spokesman Mark Pettinger.

The project price tag is $2.6 million, according to the building permit issued Oct. 11 to SunWest and Dry Heat LLC.

In May 2016, Kellogg told The Bulletin she planned to tear down a home on the site, which is adjacent to Boneyard Beer’s tasting room, and build a dispensary. The project grew from a one-story shop to a four-story building with rentals. Kellogg owned vacation rentals at a separate location nearby.

City and state law allow Kellogg, if she chooses, to permit tenants to smoke marijuana in the rentals. But, she said, she’s not creating a vacation space specifically for cannabis users and doesn’t intend to allow tenants to smoke on the premises. She said she was sensitive to the fact that children may be among her clients.

“My priority is making these just generally friendly to the public,” she said. “I don’t want to allow anything that would jeopardize our OLCC standing.”

As long as the remainder of the building is separate from the retail shop, with separate addresses, “nothing in our rules” precludes cannabis consumption on the property other than the retail space, Pettinger said.

Vacation rentals are not public places or places of employment and so are not subject to the state Indoor Clean Air Act, wrote Oregon Health Authority Jonathan Modie on Friday. The act forbids smoking in workplaces and within 10 feet of exits, entrances and accessibility ramps.

The city requires a permit to operate a short-term rental but does not address use of cannabis there.

Kellogg said she may revisit her position on cannabis use on the property after a year or so. If she chooses to allow clients to smoke marijuana at the vacation rentals, she would not be the first do so in Bend. Tokyo Starfish, a cannabis retailer on NW Arizona Avenue, operates a two-bedroom “bud-n-breakfast” in a second-story apartment above the dispensary. Co-owner Gary Bracelin said Friday the apartment has a balcony that guests are encouraged to use if they indulge.

Bracelin said he and his Tokyo Starfish partners have no plans for another cannabis-friendly vacation rental. They simply took advantage of an opportunity at the building they lease on Arizona.

“It’s working out pretty good,” he said Friday. “It’s been pretty well booked.”

— Reporter: 541-617-7815,