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HomeMy WebLinkAboutRes 2109 - Sale of Newporter Property at 14840 Tukwila International Boulevardashin on esolution o. 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 PROCESS AS AUTHORIZED BY TUKWILA MUNICIPAL CODE SECTION 2.64.030(4). WHEREAS, the City of Tukwila owns certain property located at 14840 Tukwila International Boulevard and also known as assessor parcel number 004100-0130 ("the Property"); and WHEREAS, the Mayor and the City Council find the Property is surplus and no longer needed, and that the sale of the Property is in the best interests of the City and the people thereof; and WHEREAS, Tukwila Municipal Code Chapter 2.64 provides for disposition of surplus property; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, HEREBY 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 PASSED BY THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, at a Special Meeting thereof this t(2-C,/k day of TO ivkt)i,v , 2025. ATTEST/AUTHENTICATED: n-Barnet CMC, City Clerk Tos Sharp, Cou d President APPROED AS TO FORM BY: (—Signed by: \-5E499CA4165E452 Office of the City Attorney Filed with the City Clerk: 01-0 Passed by the City Council: b Resolution Number: g I Attachment: Exhibit A, Informational Memorandum dated February 4, 2025 2025 Legislation: Declaring Property Surplus Version: 01/31/2025 Staff: D. Speck Page 2 of 2 City of Tukwila E 1 A Thomas McLeod, Mayor 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 arid 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. 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. 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. 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.aspirel1.com). In staff's opinion, Aspire will be a quality development, and a project of similar quality would be 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 ensu 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 o 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 Map of City Property of 14840 Tukwila International Boulevard Aspire 11 Images Jagpal Basra Resume