Development deal for downtown Tacoma returns for another council approval trial – KIRO 7 news Seattle
TACOMA, Wash. – Plans to complete the long-awaited downtown Tacoma development will be the subject of a final city council decision on Tuesday.
Getting to this point has been a learning curve of what the city can actually do with a project whose land sale and contract terms were set before the current real estate market boomed.
According to the proposal, Boise, Idaho-based Galena Equity Partners would step in to lead the $ 303 million project as an investment in the opportunity zone, pending board approval.
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The project, bordered by South 21st Streets to South 23rd, from Jefferson to Tacoma Avenues, is just south of the University of Washington Tacoma. The project stalled after North America Asset Management was unable to generate sufficient funding, including the EB-5 investment.
Only one building completed, the Jefferson Yards Apartments at 409 S. 23rd St. The building offers 144 market-priced apartments and 6,000 square feet of retail space and was completed in March.
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In their May 25 study session, city council members asked how Tacoma got there with the project and why the city hadn’t just exercised its rights to terminate, start over, and research. new offers.
“The concerns I have heard from the wider development community are that we underestimate ourselves in terms of property value… the property is worth more than what we initially negotiated,” said the Board member Conor McCarthy during the session.
Getting answers meant board action was pushed back to Tuesday’s meeting, having previously been scheduled for approval at its May 25 meeting.
EXPLANATION OF THE CITY
A statement drafted by city staff, which the deputy city manager sent to all city council members, sought to explain not only the history of the project, but also why a contract termination was not the best way forward. .
Elly Walkowiak, deputy director of the city’s community and economic development department, shared a copy of the statement with The News Tribune on Friday.
According to the press release:
“In 2015, after a full public process, including city council approval, the unimproved 6.4-acre downtown site was sold to North America Asset Management (NAAM) at its fair market value of 12 , $ 37 / sq. Ft. And governed by a development agreement with land use. alliances. The rights that the City retains under the Development Agreement are expressly and exclusively for the purpose of ensuring that NAAM, as owner, completes the project in accordance with the development conditions.
“The property has not belonged to the City for six years. Throughout these six years, the developer has invested funds in securing the rights as well as in the development of the site and the building. In addition, City staff and the developer agreed to make changes to the development agreement to facilitate the project.
“At present, while city staff and the city attorney’s office believe that NAAM is in breach of certain obligations, NAAM and its lawyer are vigorously contesting this assessment.”
The statement continued:
“Rather than pleading the issue, incurring unknown costs and creating investment uncertainty in the Tacoma market, the City has remained focused on its primary objective of continuing to complete the project. The proposed amendment to the development agreement ensures sufficient capital to advance and improve the city’s position by completing a project in accordance with development agreements and helps meet Tacoma’s critical affordable housing needs and enables the creation of decent wage jobs.
Under the proposed second addendum to the development agreement, the project is to be approached in phases, with completion at the end of May 2025 with a public square and one of the buildings.
NAAM would retain ownership of “Building 2” (Jefferson Yards) and transfer the remaining undeveloped property to an LLC subsidiary – Tacoma Town Center Parcels. TTC would then sell its stake to one or more LLCs created and controlled by Galena Equity Partners, according to the plans presented to the city.
QUESTIONS FOLLOWING INITIAL APPROVAL
At the May 25 board meeting, the motion to approve a transfer of interests in the North America Asset Management Group purchase, sale and development agreement to Tacoma Town Center Parcels was forwarded to its meeting. June 8. The action came after some board members raised questions during that day’s board study session about how the new deal came about, despite the recommendation for full board approval during that day. of the May 11 Economic Development Committee meeting.
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