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HomeMy WebLinkAboutCOW 2025-02-10 Item 4A - Resolution - Sale of Newporter ParcelCOUNCIL AGENDA SYNOPSIS Initials Meeting Date Prepared by Mayor's review Council review 1/13/25 DCS 2/10/25 DCS ITEM INFORMATION ITEM No. 4.A. & Spec 3.A. STAFF SPONSOR: DEREK SPECK ORIGINAL AGENDA DATE: 1/13/25 AGENDA ITEM TITLE Sale of Newporter Property CATEGORY ® Discussion Mtg Date 01/13/25 Motion Mtn Date Resolution Mtg Date 2/10/25 ❑ Ordinance Mtg Date Bid Award Mtg Date ❑ Public Hearing ❑ Other Mtg Date Mtg Date SPONSOR ❑ Council ® Mayor ❑ Admin Svcs ❑ DCD ❑ Finance ❑ Fire ❑ PeER ❑ Police ❑ PW SPONSOR'S SUMMARY The Council is being asked to approve a resolution authorizing the Mayor to enter into an agreement to sell the City's property at 14840 Tukwila International Boulevard to Jagpal Basra for the appraised value with a minimum price of $1.4 million and subject to additional terms and conditions. REVIEWED BY ❑ Trans&Infrastructure Svcs ❑ LTAC DATE: Community Svcs/Safety ❑ Finance & Governance ❑ Planning & Community- Dev. ❑ Arts Comm. ❑ Parks Comm. ❑ Planning Comm. COMMITTEE CHAIR: RECOMMENDATIONS: SPONSOR/ADMIN. Mayor's Office/Economic Development COMMITTEE Not applicable COST IMPACT / FUND SOURCE EXPENDITURE REQUIRED AMOUNT BUDGETED APPROPRIATION REQUIRED Fund Source: Comments: MTG. DATE RECORD OF COUNCIL ACTION 1/13/25 Discussion 2/10/25 MTG. DATE ATTACHMENTS 1/13/25 Informational Memorandum dated 1/6/25 2/10/25 Informational Memorandum dated 2/4/25 Draft Resolution Map of city property at 14840 Tukwila International Boulevard Aspire 11 Images Resume for Jagpal Basra 1 2 City of Tukwila Thomas McLeod, Mayor INFORMATIONAL MEMORANDUM TO: City Council FROM: Derek Speck, Economic Development Administrator CC: Mayor McLeod DATE: February 4, 2025 SUBJECT: Sale of Newporter Property (14840 Tukwila International Boulevard) ISSUE Staff requests Council approval to sell the City's property at 14840 Tukwila International Boulevard to Jagpal Basra. BACKGROUND The City owns a 35,000 square foot vacant lot located at 14840 Tukwila International Boulevard as shown on the attached map (assessor parcel number 004100-0130). The City purchased the property in 2000 to relocate a business from the site of the future Tukwila Village development. At the time, it was occupied by the Newporter Motel, which the City later demolished. When that business did not relocate to the former Newporter parcel, the City planned to sell the property. To date, staff has not actively listed the site but has responded to inquiries from interested parties and reached out to some developers and we have received no other offers. Currently, the site is zoned Regional Commercial, which has a height limit of three stories or 35 feet. In recent years, the Department of Community Development (DCD) coordinated changes to the zoning in this neighborhood, primarily around allowed uses. In 2025, DCD plans to propose some additional zoning changes for the area, which may include increasing heights and reducing parking requirements. DISCUSSION In October 2024, the City received an offer from Jagpal Basra, who would like to purchase and develop the property. Mr. Basra's plan is to construct a mixed -use building with approximately 5 floors of studio, one, and two -bedroom apartments over approximately two floors of commercial space and parking. On January 13, 2025, staff presented the main terms of Mr. Basra's offer to the Council and received feedback on the following questions: (1) Are you interested in multi -family apartments over commercial at this site? (2) Are you open to considering increased height, decreased parking, and expanding the multi -family property tax exemption program to this area? (3) Do you have a preference for the City's options for selling the property? After the Council meeting, staff continued discussions with Mr. Basra and the parties have negotiated revised terms. In staff's opinion, the current proposal presents a good opportunity for the City. 3 INFORMATIONAL MEMO Page 2 Staff is now asking for Council's approval to enter into a purchase and sale agreement (PSA) to sell the property to Mr. Basra under the following terms (in addition to standard terms and conditions): Proposed Terms (1) Price: Equal to appraised value but no less than $1,400,000.00. (2) Appraisal: Appraisal to be conducted jointly between Mr. Basra and City. (3) Deposit: 5% of purchase price; non-refundable; payable within 30 days of receiving development entitlements but no later than 12 months from execution of PSA. (4) Buyer Contingencies (prior to closing): a. City development agreement or zoning changes to allow: i. Maximum height of approximately 85 feet. ii. Minimum setbacks of 10 feet along property lines and no minimum setback along Tukwila International Boulevard property line. iii. Design review to be approved administratively. b. City to provide written confirmation that State law limits the City's on -site parking requirements to a maximum of 0.75 stalls per studio unit, 1 stall per one bedroom unit, and 2 stalls per unit with two or more bedrooms. c. City to expand the multi -family property tax exemption program (MFTE) to a geographic area that includes this site. d. Buyer's ability to complete a successful federal 1031 tax deferral exchange. (5) City Contingencies (prior to closing): a. Buyer to submit a complete building permit application for at least 100 residential units to be constructed on City parcel or in combination on an adjacent property. b. Buyer to provide copies of all environmental reports and surveys related to Newporter parcel to City. (6) Joint Contingencies a. Appraisal to be completed by September 1, 2025. b. Closing within two years after effective date of PSA. (7) Additional Provisions a. Jagpal Basra to retain majority control of property ownership entity until certificate of occupancy. Considerations Proposed Development. Staff believes the proposed development (approximately seven stories including five floors of multi -family residential and two floors of commercial and structured parking) is a good use for this site given the site is within a few blocks of a light rail station, served by frequent bus service, and walkable to local restaurants, stores, schools, library, a park and more. Although the proposed height and parking reductions do not meet the current zoning, they do meet the vision in the City's Comprehensive Plan and a long history of community desire for more development along Tukwila International Boulevard. Structured parking is very expensive to build but facilitates better pedestrian experiences for the neighborhood. The proposed development would serve as a catalyst for additional development in the neighborhood. Moving forward with new development would eliminate a vacant lot that attracts cleanliness and safety issues and can help stimulate new development elsewhere in the neighborhood. The proposed development would also help the City achieve its housing growth target of 6,500 net new housing units by 2044. Buyer Experience and Capacity. Staff toured the mixed -use, residential development the potential buyer is currently constructing in Tacoma called Aspire 11 (www.aspirel 1.com). In staffs opinion, Aspire will be a quality development, and a project of similar quality would be 4 INFORMATIONAL MEMO Page 3 good for this site. Based on initial impressions, staff believes the potential buyer has the experience, financial capacity, and relationships to carry out their proposed development. Prior to executing a PSA, staff will complete more detailed research to confirm the potential buyer's legal entity, financial capacity, and experience. Price: The proposed offer price would be equal to the appraised value with a minimum price of $1,400,000.00. To ensure a fair and quality appraisal, the buyer and City would jointly select one appraiser, agree on the appraisal instructions, title report, and all communications with the appraiser. Buyer and City would split the cost of the appraiser. Buyer Contingencies. Staff believes that the buyer's proposed contingencies for the height, setbacks, and confirmation of parking ratios, are reasonable because they would be required by any developer with the same mixed -use concept. The buyer requests administrative design review instead of Board of Architecture review to ensure greater predictability and shorten the permitting process. Staff supports that request because it is used for similar purposes in other areas of the City and will likely become a requirement by the State. The buyer's request to be eligible for the MFTE program is a normal request and staff believes it is reasonable for the City to consider adopting that policy. These proposed contingencies do not legally bind the City to approve code amendments or a development agreement for this proposed project; however, if the City does not approve a zoning or a development agreement meeting those contingencies, the buyer could choose to not purchase the property. City Contingencies. The City's contingencies described above are intended to ensure that the site is used for multi -family residential over commercial with structured parking. Joint Contingencies and Additional Provisions. The extended closing date (two years) is not standard but is reasonable for the site because the City wants this type of development, and it will take time to meet the buyer's contingencies. The provision for Mr. Basra to retain majority control is important because selecting him as a buyer is based on his experience and capacity. Process: As discussed in the January 13, 2025 meeting the Council has some options in terms of the process for selling the property. Staff believes that moving forward with this proposal now is in the City's best interest rather than listing the property on the open market because it is unlikely we would receive a better proposal for a similar development in the near term. Also, listing and actively marketing the property could take up to nine months (reducing time available to work on other projects), and possibly lose the current buyer. FINANCIAL IMPACT Due to the uncertainty of when the property would be sold, revenue from this sale is not reflected in the City's six -year financial plan. Based on the current proposal, and if the sale is completed, the City would receive at least $1.4 million in 2027. RECOMMENDATION The Council is being asked to discuss this item at the February 10, 2025 Committee of the Whole meeting and to approve the Resolution at the February 10, 2025 Special Meeting. ATTACHMENTS Draft Resolution Map of City Property at 14840 Tukwila International Boulevard Aspire 11 Images Jagpal Basra Resume 5 6 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, DECLARING THE PROPERTY LOCATED AT 14840 TUKWILA INTERNATIONAL BOULEVARD (ASSESSOR PARCEL NUMBER 004100- 0130) TO BE SURPLUS; AND APPROVING AN ALTERNATIVE SALE PROCES AS AUTHORIZED BY TUKWILA MUNICIPAL CODES10 .64.030(4). WHEREAS, the City of Tukwila owns cert International Boulevard and also known as assess Property"); and roperty located at 14840 Tukwila arcel number 004100-0130 ("the 11 WHEREAS, the Mayor and t Co find the Property is surplus and no longer needed, and that the sale of th rop: y is i he best interests of the City and the people thereof; and WHEREAS, Tukwil is . Code Chapter 2.64 provides for disposition of surplus property; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, HER RESOLVES AS FOLLOWS: Section 1. Declaration of Surplus. The property, both real and personal, located at 14840 Tukwila International Boulevard and also known as assessor parcel number 004100-0130 ("the Property"), belonging to the City of Tukwila, is hereby declared to be surplus. Section 2. Sale of Surplus Property Authorized. Pursuant to Tukwila Municipal Code (TMC) Section 2.64.030(4), the City Council hereby authorizes the Mayor and/or his designee to engage in the alternative process for receiving offers, selecting buyers, negotiating the price of the Property, and negotiating additional deal terms as set forth in the Informational Memorandum attached hereto as Exhibit A. Section 3. Minimum Price Set. The City Council hereby establishes that for the purposes of TMC Section 2.64.020, the minimum sale price for the Property shall be its fair market value, as established by an appraisal conducted by an appraiser certified by the State of Washington, with a minimum price of $1,400,000.00. 2025 Legislation: Declaring Property Surplus Version: 01/31/2025 Staff: D. Speck Page 1 of 2 7 PASSED BY THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, at a Special Meeting thereof this day of , 2025. ATTEST/AUTHENTICATED: Andy Youn-Barnett, CMC, City Clerk Tosh Sharp, Council President APPROVED AS TO FORM BY: Office of the City Attorney Filed with the City Clerk: Passed by the City Council: Resolution I mber: Attachment: Exhibit A, Informational Memorandum 'ed Fi ary 4, 2025 2025 Legislation: Declaring Property Surplus Version: 01/31/2025 Staff: D. Speck Page 2 of 2 8 City Property at 14840 Tukwila International Boulevard f.L0:351 OiNgrhill1c aj1 Itn) o $ The information ncluded on this map has been compiled by King County staff from a variety of sources and is subject to change without notice. King County makes no representations or warranties, express or implied, as to accuracy, completeness, timeliness, or rights to the use of such information. This document is not intended br use as a survey product. K ng County shall nct be liable for any general, special, indirect incidental, or consequential damages including, but not limited to, but revenues or Icet profits resulting from the use or misuse cf the information cortained on this map. My sale of this rap or information on this map is prohibted except by writen permission of King County. Date: 2/4/2025 Notes: King County 9 10 Aspire 11 1011 South 11thSt, Tacoma, WA 98405 Aspire11.com The image is a rendering from Aspire.com The image is a rendering from Aspire.com 1 11 Aspire 11 The image is a rendering from Aspire.com The image is a rendering from Aspire.com 12 2 Aspire 11 Construction Photos • Illllumuni l Ilor • • „l 11 11111111111111111 Photo taken December2024 Photo taken December 2024 14 Jagpal Basra PO Box 2127 Kirkland, WA 98083•Cell: (206) 235-9000 •jag@jilnw.com Real Estate Developer, Owner, and Operator History of developing, owning, and operating the highest quality real estate properties. Have developed, owned, and operated residential homes/communities, apartments, office buildings, warehouses, hotels, strip centers, and parking lots. Core Competencies • Land Acquisitions • Project Timelines • Development Expansion • Real Estate Operations • Real Estate Operations • Municipality/Zoning expertise • Real Estate Finance • Infrastructure Improvements • Airport Parking expertise • Quality Assurance • Strategic Planning • Budget Control Professional Experience Owned and operated general contracting and investment firms since 1988. These firms have focused on a number of areas including residential, multi -family, industrial, airport parking and commercial development. Effectively manage and strengthen relationships with clients, architects, engineers, city officials, building officials, and bank representatives. Consistently outperform industry wide benchmarks for IRR on all investments under management. As a developer I oversee daily operations, sub -contractor arrangements, quality control, job site coordination, and client meetings, payroll, budgeting, and job safety. Also develop designs, build drawings, and obtain permits. Read and lay out blueprints, produce cost/price estimates, and order materials. Additionally, I have had long term success as an operator of commercial real estate. Over the last several years I have developed the best airport parking management platform in the business. I have implemented a level of software, surveillance, and customer service that is unparalleled in the airport parking industry. Key Experience Commercial Have substantial experience in multi -family, commercial, and hotel real estate: • Aspire 11— 289-unit modern apartment community, with 12,000 SF of ground floor retail. Market rate project financed via HUD's 221(d)4 program. • Al Doors Warehouse — 20,000 SF Inudstrial/Office building, 8711 S 222nd ST Kent, WA 98031 • 77 room Aberdeen Inn - 1860 Rogers PL Kamloops, BC, Canada • 76 room Ramada Inn - 10410 158th ST Surrey, BC, Canada • 32 unit apartment complex - 15342 20th Ave Surrey, BC, Canada • 30 unit town home project- 11950 232nd ST Maple Ridge, BC, Canada 15 • 34 unit apartment complex with underground parking — 827 Roderick Ave Coquitlam, BC, Canada • 65 unit apartment complex — 15988 32nd Ave Surrey, BC, Canada • 52 unit apartment complex — 30748 Cardinal Ave Abbotsford, BC, Canada • 35 unit apartment complex — 5889 152nd ST Surrey, BC, Canada • 55 unit apartment complex — 12589 72nd Ave Surrey, BC, Canada • 48 unit apartment complex — 22476 North Ave Maple Ridge, BC, Canada Airport Parking • Park N Jet 2 Expansion II — acquired additional 6 acres to which are in the process of being developed to expand capacity of parking lot to 2,100 stalls. • Park N Jet 1 Expansion — permits are ready to develop 3 additional acres and project will be started soon • Park N Jet 2 Expansion - currently developing an additional 5 acres. • Park N Jet 2 - Brand new 4 acre state of the art airport parking facility at SeaTac International Airport. Purchased raw land, worked with city officials for permits and licensing, completed land and structural development with improvements. • Park N Jet 1 - Significant expansion and redevelopment of 3 acre airport parking facility at SeaTac International Airport. Redesigned and constructed the office building, and lot layout. Single Family Have significant experience in residential home development. Top to bottom development experience from purchasing raw land, developing into short plats, participating in engineering/architectural work, to completing construction of luxury single family homes: • 16 lot subdivision - 98th Ave & 237th ST Kent, WA 98031 • 12 lot subdivision - 132nd Ave & NE 104th ST Kirkland, WA 98033 • 8 lot subdivision - S Ainsworth Ave & S 84th ST Tacoma, WA 98444 • 8 single family homes - Kirkland, Kent, Newcastle, and Renton Also developed 100+ single family homes in British Columbia, Canada from 1988 - 2000. 16