HomeMy WebLinkAboutCOW 2020-09-28 Item 4F - Update - City Land SalesITEM INFORMATION
STAFF SPONSOR: DEREK SPECK ORIGINAL AGENDA DATE: 09/28/20
AGENDA ITEM TITLE Status Update on Sale of City Properties
CATEGORY Discussion Motion Resolution Ordinance Bid Award Public Hearing Other
Mtg Date 09/28/20 Mtg Date Mtg Date Mtg Date Mtg Date Mtg Date Mtg Date
SPONSOR Council Mayor HR DCD Finance Fire TS P&R Police PW Court
SPONSOR’S
SUMMARY
Provide a status update on the sale of City-owned property
REVIEWED BY Trans&Infrastructure CommunitySvs/Safety Finance Comm. Planning/Economic Dev.
LTAC Arts Comm. Parks Comm. Planning Comm.
DATE: COMMITTEE CHAIR:
RECOMMENDATIONS:
SPONSOR/ADMIN.
COMMITTEE
COST IMPACT / FUND SOURCE
EXPENDITURE REQUIRED AMOUNT BUDGETED APPROPRIATION REQUIRED
$ $ $
Fund Source:
Comments:
MTG. DATE RECORD OF COUNCIL ACTION
09/28/20
MTG. DATE ATTACHMENTS
09/28/20 Informational Memorandum dated 09/21/20
COUNCIL AGENDA SYNOPSIS
----------------------------------Initials --------------------------------- ITEM NO.
Meeting Date Prepared by Mayor’s review Council review
09/28/20 Derek 4.F.
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City of Tukwila
Allan Ekberg, Mayor
INFORMATIONAL MEMORANDUM
TO: City Council
FROM: Derek Speck, Economic Development Administrator
Vicky Carlson, Finance Director
CC: Mayor Ekberg
DATE: September 22, 2020
SUBJECT: Status Update on Sale of City Properties
ISSUE
The purpose of this memo is to provide a status update on potential sale of property the City
owns, including the effect on the City’s budget. Staff is not requesting Council action at this time.
Revenue from the sale of these properties will be included in the proposed 2021-2022 biennial
budget.
BACKGROUND
Members of the Council’s Planning and Economic Development Committee asked staff to give
the full council an update on the status of properties the City is currently planning to sell. Most
of the anticipated revenue from sales has been included in the D-20 Public Safety Plan model.
DISCUSSION
The City has eleven properties that the City is currently planning to sell. In the cases in which
the Council has taken action specific to a particular property, those actions are described later in
this memo. For Fire Station 51, Newporter, Minkler, and George Long the Council has provided
direction in that regard because those properties have been included in the Public Safety
Financing Plan D-20 model which was adopted by the Council in 2018 and in the adopted 2019-
2020 City budget. Staff will return to Council at a future time for approval to sell those
properties. If the properties are not sold, the overall Financing Plan will need to be revised.
The adopted budget assumed $5,889,000 of property sales in 2019 and 2020 from Tukwila
Village, the old Allentown fire station, Longacres, Travelers Choice, and Newporter. Actual
revenues to date during that period are $2,753,000, which came from Tukwila Village.
The chart below summarizes the properties the City is currently planning to sell. The revenue
and closing dates reflect what is included in the proposed budget.
Proposed 2021-2022 Budget
Properties by Budgeted Use of Funds Revenue Closing Note
Urban Renewal Line of Credit Repayment
HealthPoint 2021
Travelers Choice – Part 1 2021
Total $2,250,000
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INFORMATIONAL MEMO
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Proposed 2021-2022 Budget
Revenue Closing Note
Public Safety Plan Financing (D-20 Model)
Tukwila Village Phase 2 & 3 Done 2019
Tukwila Village Phase 2 & 3 Additional Done 2019 (a)
Old Allentown Fire Station 2021
Longacres Parcel 2021
Traveler’s Choice Part 2 2021 (b)
Old Fire Station 51 2021
Newporter 2021
Minkler 2022 (c)
George Long 2022 (c)
Total $13,518,000
HealthPoint Site
Background: The City owns four vacant parcels of land along Tukwila International Boulevard
just south of Tukwila Village. The City purchased the properties in 2014 and 2015 as part of a
community renewal and public safety project to reduce crime. Two of the motels were seized in
2013 by the Federal Government after an extensive undercover operation led by the Tukwila
Police Department. The City demolished the structures (formerly the Great Bear Motel,
Boulevard Motel, Spruce Motel, and Sam Smoke Shop located at 14420, 14440, 14442, and
14452 Tukwila International Boulevard, respectively). In 2016 the City completed demolition
and a Request for Qualifications (RFQ) process and the Council selected HealthPoint
Community Health Center, to purchase the property and build a new health and wellness
center. On December 12, 2016, the City Council authorized City Administration to enter into
negotiations with HealthPoint to sell the properties for market value. Since that time, HealthPoint
has been seeking funding from Washington State, evaluating the site, contacting potential
partners to determine what uses to include in the development, and conducting a needs
assessment. Staff from the City and HealthPoint briefed the Community Development and
Neighborhoods Committee on 12/11/18.
Current Status: HealthPoint is still very interested in building a new Tukwila Health and
Wellness Center on the site. They definitely want to include primary care medical, dental,
behavioral health, and pharmacy. They also want to include space to meet other community
needs and are still exploring what particular needs to address and which other community
partners may want to lease space or support operations. One of their key questions is whether
the site is large enough to include affordable housing and finding an affordable housing
development partner.
HealthPoint would like to purchase the property now. They have received a $1 million grant
from the State which they can apply toward the purchase and are seeking additional funding for
the purchase and development. City staff is confident that HealthPoint can find additional
funding to purchase the property in 2021. If HealthPoint can find funding for construction, they
could break ground as soon as 2023; however, it is likely to take longer than that to arrange full
funding. Currently, HealthPoint and the City are evaluating firms to perform an appraisal.
City Considerations: In the past, Economic Development staff has recommended not closing on
the sale of the property until HealthPoint has greater certainty of development partners, whether
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they need the entire site, funding, and project schedule. Because the sale price is intended to
be based on fair market value, staff believes the land value will increase with inflation and as the
neighborhood improves. However, the City is paying interest on the line of credit at an annual
rate of just over 1%. Total scheduled interest payments are $63,728 in 2021 and $68,280 in
2022 with principal payment of $2,276,000 due on December 1, 2022. There is no penalty to
pay off the line of credit early and we could reduce interest expenditures by doing that. Paying
off the line of credit would also increase the City’s debt capacity. Because HealthPoint is ready
to purchase the site now and to support the city’s financial needs, staff recommends completing
the sale in 2021.
Next Steps: The City and HealthPoint will conduct an appraisal in 2020. Staff will return to
Council for additional direction and approval of deal terms late 2020 or early 2021.
Travelers Choice Motel Site (Part 1 and Part 2)
Background: The City owns a vacant lot that formerly was the Travelers Choice motel located at
3747 South 146th Street (assessor parcel number 004000-0911). The property was one of the
three motels in the 2013 seizure mentioned above. The City purchased the site in 2014 to
prevent crime from recurring and completed demolition of the motel in 2016. In 2017 the City
used the site as a laydown yard for the South 144th Street project which was completed in 2018.
On March 5, 2018, the City Council authorized the Administration to begin the process of selling
the property at fair market value. During that year, as part of settlement agreements with
businesses that were dislocated in order to build the City’s Justice Center, the City agreed to
work in good faith to sell the property to a coalition of the dislocated businesses at fair market
value. The City conducted an appraisal in 2019 which determined the fair market value to be
$665,000.
Current Status: The City is currently negotiating a purchase and sale agreement with the
coalition. The negotiations were delayed due to the COVID-19 pandemic.
City Considerations: Part 1 of the appraised value ($400,000) has been budgeted for paying off
the same line of credit used for the HealthPoint site. Part 2 of the appraised value ($265,000) is
included in the proposed Public Safety Plan revenue budget assuming closing in 2021.
Next Steps: Staff anticipates returning to City Council in the next three months with proposed
purchase and sale terms for review and approval.
Tukwila Village Phase 2 and 3
Background: The City completed closing on the sale of the remaining Tukwila Village land in
2019. The City no longer owns property associated with Tukwila Village. The final sales price
was $463,700 higher than budgeted and all sales revenue is included in the public safety plan
financing budget. When the land was sold, the funds were placed in the Urban Renewal fund
and will require a budget amendment to transfer the funds from the Urban Renewal to the PSP
fund.
Current Status: None related to land sale.
City Considerations: None related to land sale.
Next Steps: None related to land sale.
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INFORMATIONAL MEMO
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Old Allentown Fire Station
Background: The City owns a lot at 12026 42nd Avenue South which was formerly used as a fire
station in Allentown (assessor parcel number 334740-0300). The City acquired the site in 1989
from the King County Fire Protection District #1 through annexation and has used it for storage
for most of the time since acquisition. The City does not currently have a long-term vision for
the site. Occasionally over the past few years, the City has been approached by persons
interested in converting the property to residential use by either renovating the existing buildings
or redeveloping the entire site. On March 5, 2018, the City Council authorized the Administration
to begin the process of selling the property at fair market value. In 2018 and 2019 the Public
Works Department requested the sale process be paused in order to further explore whether
the City could save money by using the site for records storage; however, that alternative did
not appear feasible.
Current Status: Staff will restart the sale process as time allows.
City Considerations: Revenue from this sale is included in the City’s proposed budget with
closing in 2021.
Next Steps: Staff will restart the sale process as time allows and return to Council with proposed
deal terms once we have a buyer.
Longacres Parcel
Background: The City owns a 100 feet wide strip of vacant land (assessor parcel number
242304-9034) on Longacres Way. The City acquired a portion of the site in 1998 to construct a
convention center. The City acquired the reminder of the site through land exchanges to
support the relocation of the Union Pacific railroad tracks in order to facilitate quality
development around the commuter rail station. The City is currently using the site to store
public works materials and does not currently have a long-term vision for the site. On March 5,
2018 the City Council authorized the Administration to begin the process of selling the property
based on price and other selection criteria. The City completed an appraisal in 2018 which
included the adjacent parcel. Based on the appraisal, staff estimated the value of the city’s
parcel would increase over $600,000 if sold in combination with the adjacent parcel. Staff
conducted a Request for Proposals (RFP) process in 2018 and received three proposals. Staff
briefed the Finance Committee on December 4, 2018 and the Council during executive session
on December 10, 2018. During 2019 the City and adjacent property owner negotiated with Pulte
Group, Inc. but were unable to agree on key deal terms. One of the main concerns of City and
the adjacent property owner was that Pulte wanted an option to purchase the property for up to
two years without paying a market rate for the option. The City also was concerned to make
sure it got a fair price relative to the price for the adjacent parcel. By summer of 2019, the
negotiations stalled.
Current Status: In 2018 and 2019, the adjacent property owner expressed a desire to sell their
property. Currently, the adjacent property owner has indicated they want to keep their property
and purchase the City’s property.
City Considerations: If the City sells its parcel without the benefit of the adjacent property being
sold at the same time, it is unlikely the City will receive bids at the budgeted sale price. The
revenue from this sale is included in the City’s proposed budget for closing to occur in 2021.
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INFORMATIONAL MEMO
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Next Steps: Staff will restart research into potential market demand if the City’s parcel is sold
separately and return to Council in early 2021 for approval of a sales process.
Travelers Choice Motel Site (Part 2)
See section on Travelers Choice above.
Old Fire Station 51
Background: The City owns a lot at 444 Andover Park East (assessor parcel number 022340-
0080) which, until very recently, served as Fire Station 51. The City does not currently have a
long-term vision for the site and it is still being used for storage. The Council has not provided
specific direction to sell the property; however, the estimated sales revenue is included in the
D20 model for financing the public safety plan.
Current Status: Staff will start the sale process as time allows.
City Considerations: The revenue from this sale is included in the City’s proposed budget for
closing to occur in 2021. Staff believes this sale is fairly straight forward and it is possible to sell
and close on the property on that time frame, assuming the City prefers to sell to the highest
bidder based only on standard criteria.
Next Steps: Staff will research market demand for the property and return to Council in early
2021 with a proposed sale process.
Newporter
Background: The City owns a vacant lot that was formerly the Newporter Motel located at 14840
Tukwila International Boulevard (assessor parcel number 004100-0130). The City purchased
the property in 2000 as part of the Tukwila Village project. The City conducted an appraisal in
2013 that estimated the fair market value to be $1,760,000 if developed as a single-story retail
store or a drive-through restaurant. Because single story, surface parked retail and drive-
through restaurants may not fit the City’s vision for the neighborhood, staff has budgeted a
lower sale price to give the City Council flexibility as it sets goals for the sale. Also, it is possible
the site has environmental contamination which could affect sale price. For a number of years
staff and two adjacent property owners have discussed coordinating a sale of all properties at
the same time in order to attract a larger, higher value development. The Council has not
provided specific direction to sell the property; however, the estimated sales revenue is included
in the D20 model for financing the public safety plan and has been included in the Capital
Improvement Plan for many years.
Current Status: Staff has not worked on this project in 2020 but will restart coordination with the
adjacent property owners as time allows.
City Considerations: The revenue from this sale is included in the City’s proposed budget for
closing to occur in 2021. It would be possible to close on the sale and receive the revenue in
2021; however, Economic Development staff recommends actively marketing the site once the
City has updated zoning on Tukwila International Boulevard and decided whether to implement
on-street parking since those policies will affect the market demand, price, and catalytic effect
for future development.
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INFORMATIONAL MEMO
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Next Steps: Staff will restart coordination with the adjacent property owners to be ready to
market the property as soon as the updated zoning and on-street parking policies are approved;
hopefully, in mid-2021 with closing in early 2022.
Minkler
Background: The City owns a lot at 600 Minkler Boulevard which serves as the City’s street
maintenance shops (assessor parcel number 252304-070). In November 2019 the City Council
provided an additional $500,000 in funding to make interim improvements to this site since
these program functions are not planned to move into the UPS site until it becomes City
property in October 2023 and after improvements are completed, which is not expected at the
earliest in 2025. Future decisions for functions at the Minkler Shop needs further Council
direction, financing, and plans. The City does not have a long-term vision for using the property
if the shops functions move into the new City shops at UPS in the future. Council has not
provided specific direction to sell the property; however, estimated revenue from the sale is
included in the D-20 model for financing the public safety plan. Given the property’s location
next to the Green River and property owned by the County, the City has been in discussions
with the King County Flood District who has expressed interest in purchasing the property for
flood control and additional benefits for habitat. The Flood District has preliminarily indicated an
openness to purchase the property now and lease it back to the City.
Current Status: The Flood District has conducted an appraisal. Staff will continue discussions
with the Flood District and other potentially interested parties.
City Considerations: The revenue from this sale is included in the City’s proposed budget for
closing to occur in 2022; however, it may be possible to sell and close on the property during
2021 with a lease back until the City moves these functions into a new facility. We expect the
lease back would be for a minimal amount and may be for five to ten years, to allow the City
time to secure financing and plans for a potential move to the UPS site.
Next Steps: Staff will research market demand for the property and return to Council in late
2020 or early 2021 with a proposed sale process.
George Long
Background: The City owns property at 14000 Interurban Avenue South which serves as the
City’s fleet maintenance shops (assessor parcel numbers 3365900925, 3365901015, and
3365901016, and 3365900975). The City does not have a long-term vision for using the
property after the shops functions move into the new City shops at Heiser. Council has not
provided specific direction to sell the property; however, estimated revenue from the sale is
included in the D-20 model for financing the public safety plan. Given the property’s location
next to the Green River and property owned by the County, the City has been in discussions
with the King County Flood District who has expressed interest in purchasing the property for
flood control and additional benefits for habitat. The Flood District has preliminarily indicated an
openness to purchase the property now and lease it back to the City until the City is able to
move to the new facility.
Current Status: The Flood District has conducted an appraisal. Staff will continue discussions
with the Flood District and other potentially interested parties.
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INFORMATIONAL MEMO
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City Considerations: The revenue from this sale is included in the City’s proposed budget for
closing to occur in 2022; however, it may be possible to sell and close on the property during
2021. Selling the property before the City functions are able to move to the new facility would
require the buyer to agree to a lease back.
Next Steps: Staff will research market demand for the property and return to Council in late
2020 or early 2021 with a proposed sale process.
FINANCIAL IMPACT
Because the item is discussion only, it would have no financial or budget impact at this time.
RECOMMENDATION
This is presented for information only as the Council prepares to enter the deliberations phase
of the budget process. The property sales will be included in the 2021-2022 proposed budget.
ATTACHMENTS
Maps of the properties
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Maps of Properties
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HealthPoint Site
Pictometry International Corp., Tukwila Technology Services, King County
City Limits
Addresses (Tukwila)
Parcels
9/22/2020, 9:31:19 AM
0 0.03 0.050.01 mi
0 0.04 0.080.02 km
1:2,257
City of Tukwila97
Travelers Choice (3747 S 146th)
Pictometry International Corp., Tukwila Technology Services, King County
City Limits
Addresses (Tukwila)
Parcels
9/22/2020, 9:28:31 AM
0 0.03 0.050.01 mi
0 0.04 0.080.02 km
1:2,257
City of Tukwila98
Old Allentown Fire Station
Pictometry International Corp., Tukwila Technology Services, King County
Addresses (Tukwila)
Parcels
9/22/2020, 9:40:01 AM
0 0.01 0.020.01 mi
0 0.02 0.040.01 km
1:1,128
City of Tukwila99
City owned parcel
N
Adjacent parcel
Railroad tracks
100
Old Fire Station 51 (444 APE)
Pictometry International Corp., Tukwila Technology Services, King County
City Limits
Addresses (Tukwila)
Parcels
9/22/2020, 8:59:33 AM
0 0.03 0.050.01 mi
0 0.04 0.080.02 km
1:2,257
City of Tukwila101
Newporter (14840 TIB)
Pictometry International Corp., Tukwila Technology Services, King County
City Limits
Addresses (Tukwila)
Parcels
9/22/2020, 9:14:49 AM
0 0.03 0.050.01 mi
0 0.04 0.080.02 km
1:2,257
City of Tukwila102
Minkler Shops
Pictometry International Corp., Tukwila Technology Services, King County
City Limits
Addresses (Tukwila)
Parcels
9/22/2020, 9:02:40 AM
0 0.05 0.10.03 mi
0 0.08 0.160.04 km
1:4,514
City of Tukwila103
George Long Shops
Pictometry International Corp., Tukwila Technology Services, King County
City Limits
Addresses (Tukwila)
Parcels
9/22/2020, 9:06:03 AM
0 0.03 0.050.01 mi
0 0.04 0.080.02 km
1:2,257
City of Tukwila104