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HomeMy WebLinkAboutCOW 2005-02-28 Item 4E - Agreement - Exchange of Real Property with Pacific Commerical Properties COUNCIL AGENDA SUVOPSIS .{tLA, y t \-1 Initials ITEM No. P ij 0 J 1bleetin Date Prepare? b 1 Mayor's review CAunezl review 1 02/28/05 1 SL 1 rJ 1 so8 4 1 I 1 1 1 I ITEM INFORMATION CAS NUMBER: 05-033 ORIGINAL AGENDA DATE: 2/28/05 AGENDA ITEM TITLE Public /private partnership to exchange real property with Pacific Commercial Properties to facilitate future extension of Strander Blvd. and mixed -use TOD near the Sounder /Amtrak Station. CXrEG OR Discussion Motion Resolution Ordinance Bid Award Public Hearing (l Other IvIt& Date 2/28/05 Mtg Date illtg Date Mtg Date Mtg Date Mtg Date Mt& Date SPONSOR Council Mayor Adm Svcs DCD Finance Fire Legal (l P&R Police PTV SP(.)NSOR'S This conceptual agreement will facilitate an exchange of real property with Pacific SUv1MARY Commercial Properties re 1) future extension of Strander Blvd., and 2) mixed -use TOD near the Sounder /Amtrak Station. REVIEWED BY E COW Mtg. CA &P Cmte E F &S Cmte Transportation Cmte Utilities Cmte Arts Comm. Parks Comm. n Planning Comm. 'DATE: 11/9/04 RECOMMENDATIONS: SPONSOR /ADMIN. Recommend approval of conceptual agreement COMMIrt'EE Recommend approval of conceptual agreement COST IMPACT FUND SOURCE EXPENDITURE REQUIRED AMOUNT BUDGETED APPROPRIATION REQUIRED So $0 $0 Fund Source: N/A Comments: MTG. DATE RECORD OF COUNCIL ACTION 2/28/05 MTG. DATE ATTACHMENTS 2/28/05 Staff memo to COW dated 2/22/05 Minutes from CAP meeting of February 15, 2005 CAP meeting packetdated February 15, 2005 will be available at the COW. City of Tukwila 6200 Southcenter Boulevard. Tukwila, Washington 98188 Steven M. Mullet, Mayor DATE: TO: FROM: SUBJECT: February 22,2005 Committee of the Whole. ~ Steve Lancaster, DCD Director , Kevin Fuhrer, Finance Director PubliclPrivate partnership relate 0 Strander Extension and Pacific Commercial Properties proposal for "Tukwila Station" ; The City has an opportunity to enter into a public/private partnership with a private developer. This partnership would involve an exchange of real property with Pacific Commercial Properties in order to facilitate: 1. the future extension of Strander Boulevard, and 2. a mixed-use transit-oriented development proposal with positive implications for the TUC. This amendment was considered by the CAP Committee on February 15,2005. The conceptual agreement was approved and forwarded to the COW for consideration. BACKGROUND Strander Extension. Renton has identified a preferred alternative for the future extension of Strander Boulevard eastward ITom West Valley Highway. Tukwila has informally concurred. The preferred alternative would require relocation of the Union Pacific Railroad (UPRR) right- of-way ITom its current location to a location adjacent to and west of the existing Burlington Northern right-of-way (see Figure 1). This alternative has cost advantages for the project, and additional advantages for Tukwila relating to the future development potential of the area. A potential risk of this alternative is that development could occur on the portion of the future UPRR right-of-way currently owned by Stuart McLeod, thus making future right-of-way acquisition more expensive and possibly threatening the viability of the Strander Extension proj ect. Tukwila Station Proposal. Pacific Commercial Properties (PCP) has proposed a mixed-use development on property currently owned by Stuart McCleod. The property is located north of Longacres Way, between the Union Pacific and the Burlington Northern rights-of-way. The project, tentatively named "Tukwila Station," would include approximately 250 to 300 residential units and about 5,000 square feet of commercial space. The City of Tukwila owns approximately 1.63 acres of land immediately north of the Tukwila Station site. Phone: 206-433-1800 · City Hall Fax: 206-433-1833 · www.ci.tukwila.wa.us PROPOSAL Pacific Commercial Properties (PCP) has indicated a willingness to work with the City for the purposes of this land exchange. The sequence of transactions is keyed to Figure 2 and would be as follows: Step 1 PCP transfers the easternmost 100-foot strip of their property to the City, retaining a 30- foot easement for interim parking purposes. This eastern 100 foot strip is needed for relocation of the Union Pacific RR right-of-way to Tukwila and measures approximately 103,525 sq. ft. Step 2 The City transfers a portion (approx. 36,590 sq. ft )ofits property to the north to PCP, which PCP will use as a portion of its Tukwila Station development. Step 3 At the point in time where Strander is ready to be constructed and the Union Pacific right-of-way is ready to be relocated, PCP would relinquish its easement and the City would transfer 43 feet of the old UP right-of-way to PCP (approx 59,180 sq. ft.). PCP would relocate its displaced parking from the easement on the east of its property, to this 43-foot strip on the west. At the end of this process, PCP would have transferred 103,525 square feet of property to the City; the City would have transferred 95,770 square feet to PCP. All this would be detailed in a development agreement. SEQUENCE 1. PCP transfers area shown to the City, retaining 30- foot easement for parking purposes. 2. City transfers area shown to PCP. 3. When funding for the Strander project has been secured and the project is in the design phase, the City transfers 100- foot strip of property to Union Pacific RR in exchange for "old" UP right of way, in conjunction with Strander extension. City transfers 43' wide area shown to PCP. FINANCIAL IMPLICATIONS By way of background, the HotellMotel Tax Fund (101) purchased the land for $1,450,000 with resources received via an interfund loan from the General and Arterial Street Funds. The outstanding loan balance as of December 31,2004, was $1,250,000. The 2005 Budget provides for a $200,000 loan repayment. This would leave a balance owing to the General and Arterial Street Funds of$1,050,000 as of December 31,2005. The Lodging Tax Committee may accept a transfer of land ownership to the General Fund in exchange for the debt forgiveness. However, the Lodging Tax Committee may not approve this transaction if the appraised value is detennined to be below $1 million. Preparations are presently undelWay to secure appraisal services. The land transfer proposal will be discussed with the Lodging Tax Advisory Committee on March 3,2005. 2 If the transfer is approved through the developer agreement, the planning model will initially be reduced by the amount of the interfund loan balance remaining. The reduction will be mitigated by the revenue opportunities that are addressed in the next section of this memorandum. REVENUE OPPORTUNITIES The Tukwila Station Proj ect proposal stands to generate (4) revenue sources for the City - property tax, sales-tax, real estate excise tax (REET), and the building permits and fees. In discussions with the developer, he has indicated a $65 million dollar valuation at buildout with estimated construction costs of $30 million. Given the indicated values, the following revenues could reasonably be expected from the proposed project: Property Tax A Property Tax B Sales Tax REET Build PennitlFees $100,000 $100,000 $300,000 $250,000 $350,000 Construction Annual Construction Period Period of Initial Sales Application Period Again as addressed in the financial implications section of this memorandum, these revenues would offset the reduction in the planning model for the amount of the interfund loan balance payable at the time the land transfer is executed. OTHER CONSIDERATIONS If the City does not partner with Pacific Commercial Properties to facilitate this land transaction work, it is likely we will be faced with a proposal to develop the McLeod site in a manner that will preclude the current plans for extending Strander. At the very least, full development of the McLeod property would significantly increase the future cost of the Strander extension project, possibly affecting its viability. RECOMMENDATION Conceptually approve public/private partnership with Pacific Commercial Properties. Forward this conceptual approval in conjunction with approval of multi-family TOD amendment to the February 28th meeting of the Council of the Whole. Authorize Staff to prepare public/private partnership agreement with Pacific Commercial Properties. 3 Vicinity Map Tukwila Station Site -- STEP 2 Land to be deeded from the City of Tukwila to Pacific Commercial Properties, Inc. approx. 36,590 square feet STEP 1 Land to be deeded from the Pacific Commercial Properties, Inc. to the City of Tukwila aRProx. 103,525 square feet ~ ~ CL ~ -.....:: ~ E Q) ~ ~ t:: ~ ~ .~ ~ ~ S LongacreS Wy TUKWlLA STATION @ 111=200' Figure 2 Community and Parks February 15, 2005 "'" 4. Zonin2: chan2es to amend TUC zonin2 at TOD The Lodging Tax Advisory Board (L TAB) owns some land near I-405 in the northern most section of the transit-oriented development area (TOD) near Interurban. A proposal for a large mixed-use project south of the City property has come in. Zoning changes are needed to allow that. The Committee talked about whether the parking requirements were adequate to accommodate all the cars that would be part of the development. Requiring one car per bedroom helped "'lith the condo/apartments. A conditional use design review will be used on the project. The financial implications for the city include the fact that the general fund now "owns" the property, and the City has been receiving money from the L T AB to payoff the debt. Land is needed for future rail lines on the east side of the condo development, and most of the city's land too would be needed if the Burlington Northern railroad tracks were switched from the west side of the TOD to the east side. The city \vould lose the L T AB funds, but Kevin explained that Lodging Tax was really part of the City, too, so it is not such a major loss. Jack said the City is trying to acquire the space for the tracks move now, so it will be there when the move is needed for the Strander street extension. This may not happen for 10-15 years. The Committee asked for more clarification of both the land swap and the financial implications involved. Recommend to CO\v. 7. Macadam Winter Garden Bruce and Paul introduced Michael Brown, \vho is part of the team working on the winter garden. Michael talked about their plan, which satisfied criteria from winter beauty and interest, to low maintenance, tree removal and planting, and safety. About 14 3' trees would go' along the street, and 60 more trees within the park. Bruce said the plan \vas stellar, but the city funds could not afford the $275k cost. To make it affordable Bruce will take $80,000 from Phase II of Cascade View Park, saying his staff has said they can do most of the "vork themselves. That brings city funding to $240,000, and if a water feature is cut, the rest of the plan could be implemented. Take plan to Council. 8. Fourth Quarter Reports There were no problems with the fourth quarter reports. Information. ~ Committee chair approval