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HomeMy WebLinkAboutCAP 2015-09-28 Item 2B - Discussion - Disposition Options for Traveler's Choice MotelCity of Tukwila Jim Haggerton, Mayor INFORMATIONAL MEMORANDUM TO: Mayor Haggerton Community Affairs and Parks Committee FROM: Derek Speck, Economic Development Administrator DATE: September 23, 2015 SUBJECT: Traveler's Choice Motel Disposition Options ISSUE Should the City demolish the Traveler's Choice Motel or temporarily lease it to 4Culture to be used for art such as artist studios, galleries, work space, practice space, or performances? BACKGROUND In order to reduce crime in the Tukwila International Boulevard neighborhood, the City has purchased four motels (Great Bear, Boulevard, Spruce and Traveler's Choice) and the Sam Smoke Shop. The Great Bear, Boulevard, Spruce and Smoke Shop are dilapidated structures that are adjacent to each other and a good opportunity for redevelopment. The City plans to select a developer in 2016. Since it is likely to be a few years until any developer is ready to start construction, staff plans to demolish these structures in order to reduce blight in the neighborhood. The Traveler's Choice motel was built in 1992 and is in physically better condition that the other motels. It is separate from the other motels and sits on a 0.61 acre lot. When the Federal Government seized the motel in 2013, it was not one that the City had planned to purchase. It had high crime levels similar to the other motels but since it was outside the City's community renewal area, we did not have condemnation authority and so did not think the property owner would want to sell it. Once the Federal Government seized the motel, the U.S. Attorney's Office was able to coordinate a settlement agreement with the owner and lender and the City purchased the property in 2014. We have completed the specifications for demolition of all of those structures and plan to issue a call for bids in October. Staff plans to bring the bid results to the Finance and Safety Committee on November 3rd and seek Council award of a bid in November. The demolition of the Traveler's Choice is included as an additive alternate. Demolition could start as soon as December although it is likely to occur in early 2016. DISCUSSION Staff is seeking Council direction on the City's plans for the Traveler's Choice property since that could affect the decision on whether to demolish the building. The City has two basic options: 3 INFORMATIONAL MEMO Page 2 (1) Sell the property — The City could sell the property "as is" in which the buyer could re- use the structure (but not as a motel). The City could also require the buyer to demolish the structure or the City could demolish the structure and then sell the property. A 2013 appraisal estimated the land value at $400,000. (2) Hold the property — The City is working on a facilities plan and it is possible the City would want this lot for future City facilities. The City is also updating the Tukwila International Boulevard element of the Comprehensive Plan. After that it is likely we would revise the zoning. We could decide on the disposition until after the facilities plan and zoning changes are complete. If the City wants to hold the property, then we have two basic options: (1) Demolish the structure and maintain a vacant lot — A benefit of this option is that we will have a contractor demolishing the other motels and it is probably more efficient to do the Traveler's Choice at the same time. Demolishing the structure can also send a clear message to the community. (2) Lease the property to 4Culture to bring art into the community — Staff has researched various alternative temporary uses for the Traveler's Choice and the only alternative that appears appropriate would be a lease to 4Culture. We have met with 4Culture and they are very interested in exploring this opportunity. They see possible uses such as: the building itself could be repainted as an art object, the rooms could be used for artist work space or practice space, or the rooms and parking area could be used for public spaces for art displays, performances, workshops, and sales of art. With the site's location, 4Culture sees opportunities to connect with the Tukwila School District and Tukwila's diverse residents. If the City decides to lease the property to 4Culture, staff recommends the following terms: (1) City leases the property to 4Culture for $1 per year. (2) 4Culture must provide public access to the property to view or participate in art. (3) City has no responsibility for making any improvements to the property. (4) 4Culture pays for improvements, ongoing maintenance, taxes and fees. (5) Property may only be used for arts related activities such as work space, practice space, performance space, galleries, sales of art, and public events. (6) Property may not be used for any type of living space (motel or apartments) except for one unit. (7) All use must comply with City zoning and building codes. (8) City could access the property to perform testing or investigation related to the sale or redevelopment of the site. (9) The term of the lease would be up to five years. (10) After three years, the City could terminate the lease with one year notice if the City decided to use the property for City facilities. Staff believes that converting a motel to a use that brings more art into the community can provide many public benefits including valuable service to our residents, improving Tukwila's image, and bringing excitement into the neighborhood. This may also save the City money by delaying, and possibly avoiding, the cost of demolition. A temporary lease would still protect the City's option to use the property for city facilities at a future time. 4 WA2015 Info Memos\Travelers Choice Options Memo 2015 (3).doc INFORMATIONAL MEMO Page 3 One of the risks of using the property for arts is that the artists or community could become so attached to the project that they would want to extend the lease which could make it more difficult to repurpose the property. However, this risk can be partially mitigated by including clear provisions in the lease. Although 4Culture has expressed a strong desire to explore this opportunity, they have not made a final decision or official proposal. If the Council is interested in exploring this opportunity, 4Culture would perform more analysis, seek their Board's approval, and make a proposal. Staff is asking the Council at this time to authorize the Mayor to enter into a lease agreement with 4Culture so that if and when 4Culture is ready, we can execute the lease more quickly. If 4Culture and the City are not able to agree to terms, then the City would proceed with the demolition. The City will need to make the final decision on demolition after the contractor has been selected and has begun work. Other Possible Temporary Uses: Retail, Office, Commercial: After the City purchased the motels, the City has been approached by people and organizations seeking to lease the properties and use them for activities such as retail sales or job training. Staff does not recommend using the Traveler's Choice for those activities for the following reasons. First, although those organizations may agree to a temporary lease, it is likely that they would seek City support to continue operating which could affect the City's long term disposition of the site. Second, most of the organizations or people who have approached the city do not have significant experience managing these activities. Third, it is not clear whether the operators of such activities could afford to maintain the property. Use as Motel: The City has been approached by individuals who would like the purchase and /or operate the property as a motel. The City's zoning code does not allow motels in this location and so that option is neither possible nor desirable. Housing for Homeless: The Tukwila School District inquired as to whether any of the motels could be used to provide some sort of housing for the schoolchildren in our District who are currently homeless. Homelessness, especially for children, is a significant public policy issue impacting our residents and so we took some time to analyze the Traveler's Choice to see if this would be a reasonable opportunity. The motel was built in 1992 and is a two floor, sprinklered, wood frame structure with thirty -four motel rooms and one apartment. The motel rooms are generally small and do not have kitchen facilities or closets. The property is located within the Neighborhood Commercial Center (NCC) zone. This zone does not allow construction of multi - family residential units (e.g. apartments) unless they are above office or retail uses. Although the structure appears in reasonably good shape, it was built to code for Group R Division 1 (Hotel) and converting it to Group R Division 2 (Apartment) would require extensive renovation to meet the State building codes. For example, the building code requires a minimum of 220 square feet of floor area for the living room but twenty -eight of the rooms are approximately 150 square feet. For those units to be converted to apartments, they would need WA2015 Info Memos\Travelers Choice Options Memo 2015 (3).doc 5 INFORMATIONAL MEMO Page 4 to be combined and walls removed. As another example, the State building code requires apartments to have a separate closet, a kitchen sink, a cooking appliance, and refrigeration facilities and a clear working space of not less than thirty inches. Possibly, if two motels rooms were combined, one of the bathrooms could be converted to a kitchen. The bathrooms may need renovation to meet current accessibility standards (increased dimensions, clearances for plumbing fixtures, etc.) It appears that the twenty motel rooms on the second floor could be converted to twelve apartments. The zoning would not allow the units on the lower floor to be converted to apartments and would require the lower units to be converted to office or retail in order to convert the upper floor to apartments. All told, it appears the motel could be converted to create twelve apartments but it would be very expensive. Unfortunately, this does not appear to be a cost - effective option. FINANCIAL IMPACT The demolition for the Traveler's Choice is included in the budget for the TIB Redevelopment project #91330201 which includes the purchase and demolition of the four motels and smoke shop. The total project budget is $6,235,000. The costs for purchase, preparing the bid specifications, and demolition is estimated at approximately $6.4 million. By not including the Traveler's Choice demolition the estimated savings to the City would be approximately $230,000. We will know whether we need a budget amendment after the bidding process is complete. That topic will be brought before the Finance and Safety Committee on November 3rd RECOMMENDATION The Council is being asked to authorize the Mayor to enter into a lease with 4Culture for the Traveler's Choice motel property and consider this item at the October 12, 2015 Committee of the Whole meeting and subsequent October 19, 2015 Regular Meeting. ATTACHMENTS None 6 WA2015 Info MemosUravelers Choice Options Memo 2015 (3).doc