Development deal for downtown Tacoma heads back for another try at council approval – KIRO 7 News Seattle

TACOMA, Washington – Plans to complete development of long-awaited downtown Tacoma await final action by the city council on Tuesday.

Reaching this stage was a learning curve of what the city can do with a project whose land sale and contract terms were set before the property market, which is currently exploding.

Under the proposal, Boise, Idaho-based Galena Equity Partners would acquire the $ 303 million project as an investment in the Opportunity Zone, subject to council approval.

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Bounded by South 21st to South 23rd from Jefferson to Tacoma Avenue, the project is located south of the University of Washington Tacoma. The project stalled after North America Asset Management failed to generate sufficient funding, including the EB-5 investment.

Only one building has been completed, the Jefferson Yards Apartments at 409 S. 23rd St. The building offers 144 marketable apartments and 6,000 square feet of retail space and was completed in March.

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How Tacoma got this far with the project and why the city did not simply exercise its right of resignation, start over and seek new offers, members of the city council asked questions at their study session on May 25th.

“The concern I’ve heard from the wider development community is that we are underperforming in terms of the value of the property … the property is worth more than we originally expected,” Councilor Conor McCarthy said at the meeting.

Receiving replies meant that the council’s actions were postponed to Tuesday’s meeting, having previously been scheduled for approval at the May 25th meeting.

DECLARATION OF THE CITY

A statement from the city officials, which the deputy city director sent to all city council members, was intended not only to explain the history of the project, but also to explain why terminating the contract was not the best way to go.

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 statement:

“In 2015, following a fully public process, including city council approval, the 6.4 acre, undeveloped Town Center property was sold to North America Asset Management (NAAM) at the then market value of $ 12.37 / sf and alliances governed by a development agreement with land use. The rights reserved by the city under the development contract are expressly and exclusively used to ensure that the NAAM, as the property owner, completes the project in accordance with the development conditions.

“The property has not been owned by the city for six years. During these six years, the developer invested money in securing claims as well as in site and building development. In addition, city officials and the developer have agreed to amend the development agreement to make the project easier to complete.

“While city officials and prosecutors currently believe that NAAM has defaulted on certain commitments, NAAM and its attorneys vigorously deny this assessment.”

The statement continued:

“Rather than litigating the issue, which creates unknown costs and investment uncertainty in Tacoma’s market, the city has continued to focus on its core objective of tracking the completion of the project. The proposed amendment to the development agreement will ensure sufficient capital to advance and improve the city’s position by delivering a project in line with the development agreements, helping to meet Tacoma’s critical needs for affordable housing and livable wage employment enable.”

As part of the proposed second amendment to the development contract, the project is to be tackled in stages, 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 vacant lot to an LLC subsidiary – Tacoma Town Center Parcels. TTC would then cede its shares to one or more LLCs formed and controlled by Galena Equity Partners in accordance with the plans submitted to the city.

ASK FOR FIRST APPROVAL

During the Council meeting on May 25, the request for approval of an assignment of interests in the purchase, sale and development agreement from North America Asset Management Group to Tacoma Town Center Parcels was forwarded to the June 8 meeting. The action came after some members of the council asked questions during the council study session that day about how the new agreement came about, despite the recommendation for full approval from the council at the meeting of the economic development committee on May 11th.

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