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HomeMy WebLinkAboutReg 2016-08-01 Item 7B - Discussion - Tukwila Village Land Sale Phase ICOUNCIL AGENDA SYNOPSIS Initials Meeting Date Prepared by 1Llayor i rep nc :il review 08/01/16 DCS /1 Motion Date 08/08/16 08/08 /16 DCS • Bid Awar d ❑ Public Hearing Aitg Dale ❑ Other Mtg Date Mtg Date Mtg ATtg Date SPONSOR ❑ Council [ TS ❑ PeR ❑ Po/tce ❑ PTY/ ITEM INFORMATION ITEM No. 7.B. 91 STAFF SPONSOR: DEREK SPECK ORIGINAL, AGENDA DATE: 8/1/ 16 AGENDA ITEM TITLE Tukwila Village Land Sale for Phase 1 CATEGORY ■11 Discussion 08/01 /16 /1 Motion Date 08/08/16 ❑ Resolution A1tg Date ❑ Ordinance AZtg Dale • Bid Awar d ❑ Public Hearing Aitg Dale ❑ Other Mtg Date Mtg Date Mtg ATtg Date SPONSOR ❑ Council [ TS ❑ PeR ❑ Po/tce ❑ PTY/ 11 Mayor 1 HR DCD • Finance U Fin' SPONSOR'S The Adm nistration seeks Council approval to enter into a purchase and sale agreement to SUMMARY sell Phase 1 (approximately 2.67 acres) of Tukwila Village land to Tukwila Village Development Associates, LLC. REVIEWED BY 1, COW Mtg. ❑ CA &P Cmte ❑ F &S Cmte ❑ Transportation Cmte E utilities Crnte ❑ Arts Comm. ❑ Parrs Comm. ❑ Planning Comm. DATE: COMMITTEE CHAIR: RECOMMENDA3'IONS: SPONSOR/ADMIN. COMM=EH Mayor's Office COST IMPACT 1 FUND SOURCE EXPENDITURE REQUIRED AMOUNT BUDGETED APPROPRIATION REQUIRED so $ $o Fund Source: Comments: This would generate $223 million in one -time revenue for the general fund. MTG. DATE RECORD OF COUNCIL ACTION 08/01/16 MTG. DATE ATTACHMENTS 08/01/16 Informational Memorandum dated 7/27/16 Exhibit A: Phased Development Plan Map Exhibit B: Lot Consolidation 113 -021 Map Exhibit C: Lot Consolidation L16 -031 Map 91 City of Tukwila Allan Ekberg, Mayor INFORMATIONAL MEMORANDUM TO: City Council FROM: Derek Speck, Economic Development Administrator CC: Mayor Ekberg DATE: July 27, 2016 SUBJECT: Tukwila Village Land Sale ISSUE The Administration seeks Council approval to enter into an agreement to sell two parcels of the Tukwila Village land to Tukwila Village Development Associates, LLC. BACKGROUND On October 22, 2012 the City Council approved a Disposition and Development Agreement (DDA) with Tukwila Village Development Associates, LLC (TVDA), the project developer for Tukwila Village. That agreement outlined the relationship between the City and TVDA and provided for numerous future steps, including sale of Tukwila Village land to TVDA. Since 2012 the project partners have completed many tasks related to the project. The City has vacated 41st Avenue South, sold a parcel of land to the King County Library System (KCLS), consolidated twenty lots into five, approved a development agreement, approved parking determinations, and approved multiple applications for design review, grading, and building permits. KCLS designed a library and started construction. TVDA designed four buildings and a plaza, demolished buildings, graded the site, installed underground utilities, and began construction. And all the partners agreed on easements for access and parking. The City and TVDA are now ready to execute a purchase and sale agreement so that TVDA can complete its project financing and purchase the land necessary for Phase 1. Phase 1 is shown on Exhibit A. TVDA anticipates buying Phase 2 in 2017 and Phase 3 in 2018. On July 15, 2016 the Washington State Housing Finance Commission announced that, due to a surge in demand for affordable housing funding this year, any applications for funding in 2016 must be submitted by August 15, 2016. TVDA would like to submit an application to the Commission for Phase 1 in order to receive funding and purchase the property this fall. The application requires TVDA to have a signed purchase and sale agreement (P &S) for the Phase 1 land. The City and TVDA were planning to execute the P &S in September but due to the recent announcement, we need to move that date up to August 12. Staff is requesting the Council to discuss the P &S at the Regular meeting on August 1 and authorize the Mayor to sign a purchase and sale agreement at a Special Meeting on August 8th. DISCUSSION The proposed deal terms carry out the intent previously outlined in the DDA. The key provisions are: 93 INFORMATIONAL MEMO Page 2 Property: The land proposed for sale is Parcel C of Lot Consolidation L13 -021 (Exhibit B) and Parcel A of Lot Consolidation L16 -031 (Exhibit C). These lots comprise 116,173 square feet, or about 2.67 acres. This is approximately 43% of the Tukwila Village site (including the library parcel). Price: The final price will be set based on a financial model called a residual land value analysis (RLV). The RLV will take into account the project's costs (including pre - development, construction, financing, and fees), revenues, and a market capitalization rate to calculate how much the project can afford to pay for the land. That result becomes the price for the land. If the calculated land price is below a minimum then the City does not have to sell the land. The minimum price is based on a formula of $10,000 per housing unit plus an equivalency for commercial space. TVDA estimates the minimum price for the two parcels being sold at this time will be $2,230,000 and the remaining phases will be $2,220,000 for a total of $4,450,000. Please note that the $4.45 million relates only to the property being sold to TVDA and does not include the land sale revenue from other property purchased as part of the Tukwila Village project (the library parcel, house at 14239 42nd Avenue South, and the former Newporter motel site). The City and TVDA will mutually agree on the methodology and assumptions in the RLV. TVDA will provide the RLV and the City will review it with help from Heartland, a real estate advisory services firm. Preconditions: The P &S will include many pre- conditions that must be met before the money and deed are exchanged and escrow closes. The conditions will include those that are typical of real estate transactions such as clearing up title issues, providing title insurance, providing environmental documentation, etc. The conditions will also include some significant ones to protect the City's goal of making sure that TVDA completes the project as intended. Those are: • Evidence of Available Funds: TVDA will provide written proof of sufficient financing (equity and loans) to complete the project which is approximately $50 million for this phase. • Construction Contract: TVDA will provide a construction contract so that it is clear the project can be completed within the amount of available financing. • CC &Rs: TVDA and the City will mutually agree on Conditions, Covenants, and Restrictions (CC &Rs) which the City will record against all of the Tukwila Village parcels prior to closing on the first sale. The CC &Rs are a key method to ensure that future property owners are required to maintain the plaza parcel, provide cross - parcel utility or other easements, and use the property as intended. • Lease for Plaza and Commons: TVDA and the City will mutually agree on a lease for the plaza and commons (plaza, community room, and commercial kitchen). The basic lease terms are outlined in the DDA. Those terms assume that TVDA and the City cooperate to form a community organization (non - profit) to operate the plaza and commons. At some point, the community organization will be the lessee; however, since that organization is not yet formed, TVDA will lease the space to the City and the City will then assign the lease to the non - profit. 94 H:1Temp - Ana 1\Reg 08 -01 Land Sale Info Memo.doc INFORMATIONAL MEMO Page 3 • Term Sheet for Police Resource Center: TVDA and the City will mutually agree on a list of terms that will be used at a future time to execute a lease for the Police Resource Center. Though it is technically possible to agree on the actual lease as a condition for closing, since the Public Safety Plan may be on the November ballot, it is better to wait on executing a lease until after the results of that vote are known. Assignability: TVDA plans to form a different limited liability company or limited partnership for each land purchase primarily to facilitate financing. TVDA will be the managing member or managing general partner, respectively. To accommodate this, the P &S needs to be assignable to an entity that meets City approval. There are two significant changes in TVDA's current development plan as compared to their plan over the past few years. First, TVDA's phasing plan in 2013 assumed that Building A would be in the first phase while Buildings D and E would be in the second phase. Now, that is reversed with Buildings D and E in the first phase and Building A in the second phase (see Exhibit A). Second, in 2012 TVDA intended on Building A including 80 apartments for rent to households of any age. TVDA ran into some challenges when trying to arrange financing for that type of project and now plans to develop the 80 apartments as senior housing. This type of senior housing would still allow up to 15% of the units to be rented to households of any age. TVDA has also agreed to develop Building B as the type of senior housing that would allow up to 15% of units to be rented to households of any age. Between the two buildings, up to 45 apartments would still be rentable with no age restriction. If Council authorizes the Mayor to execute a P &S, the next steps are: (1) City and TVDA complete and sign the P &S (by 8/12/16) (2) Developer submits application to WSHFC for financing approval (by 8/15/16) (3) City and Developer complete conditions precedent. This includes City Council approval of the plaza and commons lease and the term sheet for the Police Resource Center. (4) Close escrow (estimated for October 2016). FINANCIAL IMPACT If completed, the proposed land sale will result in revenue to the City of at least $2,230,000. RECOMMENDATION The Council is being asked to authorize the Mayor to execute a purchase and sale agreement to sell Parcel C of Lot Consolidation L13 -021 and Parcel A of Lot Consolidation L16 -031 to Tukwila Village Development Associates, LLC for a price of not less than $2,230,000. Due to the timing needed for the financing application, Council is asked to consider this item at the August 1, 2016 Regular Meeting and the subsequent Special Meeting. ATTACHMENTS Exhibit A: Phased Development Plan Map Exhibit B: Lot Consolidation L13 -021 Map Exhibit C: Lot Consolidation L16 -031 Map H:1Temp - Ana 1\Reg 08 -01 Land Sale Info Memo.doc 95 96 L090'POZ'90Z :euoyd 88[86 VM `eIlTBeS 01.Z OT!nS y ;noS anueny pU 9 OOZ9[ 4uauaalmue puei aan }aa�iyaae adeaspuel 6uluueld puel 0-no! cn Issue Dates 0 z CD w 0 U z Q 5 J CO o BUILDINGS D & E • • • N LLI C!) • BUILDING A M 0) • BUILDING B 0 z 0 CO (1) 2 0_ 1- W z_ J 0 0 0 J LL 0_ 0_ U N a) 0 () BAR SUBMITTAL STAFF COMMENTS PHASING REVISION CV CV CV C \ N- 0 0 0 3-noipn }sy7e4 91.OZ © 1N3SNO0 N311I M b13H1 lflOH11M a3118IHO Id SI 311 `OlafllS dl 3H1 JO NOI1VmOHlflV 1flOHIIM ONIMVHG SIH± 3O 3Sfl :1H0IHAdOO Exhibit A 0[09-[EZ (£9Z) : 3 [009 -[EZ (E9Z) : 1 1LE86 VM 'dm-wind OOE 311fS ``d `JNlaiine `3S 3f1N3AV H1LZ - [OZ 311 `S31VIOOSSV 1N3INdO13A3a 39V11IA t/3IM�inl :1NVOI1ddV H3NMO VM ` V1IM)inl `133211S H1M7I S atIVA3111O8 1VNOI1VN2131NI t/3IMNflI 39V111A V11MNnl DRAWN BY: CP /LP /MB LU Cz 00 UJ J Q > Z 2 w J Q 0O BAR SUBMITTAL --- s - -sz -- -,V / / 1///////////// //// / /1 /1/_/ // / / /////// / / / // /// -- �..,�_ 3NI1 .11�13d02id • I. lo i Z 0 0 ct uJ >w '1S HIbb S La_ Ili Aft L L 7 z 0 z 0 I Lf F- O I- 0 Z LU Z a 0_ 0 Q z W z_ J F-- W 0 0 � cr) � ri 1-, ti LIJr 0 (IY--ici- rj J D l< i CO X—Lmi- — OIL •ital ss 4 t, 4 ,:: 4.4* 444.-vtt : / *ft4A0 1 0 . arr r :••4•41■07t.304.40.0. 000100430.4 ■ zi 0 0 L - — — I /Do_ 97 CRY of Tukwila Delawi nata d Community Droal p mar t XXV 6oulhowa r lion wad Tukwila. kVA Hilal TM.phom f1661. 4.S1 -11110 FAx gel) 4764666 64o.11: follawLnimeuknAWArAmon LOT CONSOLIDATION NO. L13 -021 Exhibit B mow frfi.7f Igo wow( Nam 9 PARCEL B Y Kulj xlCala t . j _' +ecrA J . 144Tli STREET nu? NEW LOT CONFIGURATION & EASEMENTS LW 1Sw YOL g4. fp. am srn n- Ca VIM} �sr, ak 6e112 Swlar -tan p.njinr -a:ax FAa MIME* tea..... E SCALE: r• o- PTN OF THE 8E1I4,, OF THE Sh4114 OF SEC. v8, TOWNSHIP 23 NORTH, RANGE 4 EAST, W.M. CITY OF TUKOKA,. xING COUNTY, wA8HNIOTON Q City a+1 Tukwila DaprhlrN v! Community Uvndopmeal. 9]04 Seutheowler EkKAw.ard, Tukrua. WA 98463 1Wpherw l8311l 4J1 -3674 F13-3 SiS E+eak pl a wrotitukwie.w&gw LOT CONSOLIDATION NO. Li 6-003 Exhibit C 71,3GEL 3 d I co, nF �,Ip.liiW" r r 11C° 21 I r a1 C�' 10, Lti2 te, p 1411TH STREET sysnit - strs'at td NEW LOT CONFIGURATION U rlon *Max 90Uan Imo. 1Y lam imt -433 (+$1354 -amo rax -0II. tNi ffAlVat ' otSrg�1``• er••LM4 Cretriape,y, iP°aif 9 2a. 'S? 100 CC.A• r. 7`•50' 47L PG, /:G7G 2 l PY Xoy I" 3 is PTN OF THE NE1 /4 OF THE NWI /4 OF SEC, 22, TOWNSHIP 23 NORTH, RANGE 4 EAST, W.M. CITY OF TUhKWILA. KING COUNTY. 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