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HomeMy WebLinkAboutFS 2013-07-02 Item 2A - Settlement Agreement - Doak Homes AmendmentTO: City of Tukwila Jim Haggerton, Mayor INFORMATIONAL MEMORANDUM Mayor Haggerton Finance and Safety FROM: Jack Pace, DCD Director BY: Brandon Miles, Senior Planner DATE: June 26, 2013 SUBJECT: Doak Settlement Agreement 2 "d Amendment ISSUE Authorize the Mayor to amend the terms of a settlement agreement with Doak Homes Inc. Specifically the following changes are proposed to the terms of the existing agreement: 1. Extend the agreement an additional 36- months; and 2. Remove the requirement for Doak to develop the lots in a specified pattern. BACKGROUND In July of 2008, the City of Tukwila and Doak Homes, Inc. entered into a settlement agreement regarding several properties owned by Doak Homes, Inc. in the Allentown Neighborhood of the City. The settlement agreement resolved a Federal Court land use case regarding application of the City's code to Doak's property. The agreement covered King County parcels, 017900- 1730, 017900 -1755 and 017900 -1855. These parcels are shown in Attachment B. The agreement allowed Doak Homes, Inc to construct 14 homes on lots that did not comply with the City's minimum lot area requirements. The number of homes permitted under the agreement was more than allowed under the current zoning, but less than what had been permitted under previous development regulations. In exchange for allowing Doak Homes to build on smaller lots, the City specified certain requirements beyond the City's development standards for LDR zoning. These requirements included a specific site layout, maximum building footprint limitation, use of stone on the exteriors of the homes, a maximum lot coverage limitation, and additional landscaping. The agreement was valid for 30 months after execution (July of 2008). Prior to expiration of the agreement, the City and Doak Homes agreed to extend the agreement an additional 36 months. Thus, the agreement will expire in July of 2013. 1 INFORMATIONAL MEMO Page 2 DISCUSSION Doak Homes has completed construction of five homes (photos of the completed homes are included at Attachment C). Furthermore, Doak Homes has completed installation of the necessary public improvements for the larger ten home project. This was a significant endeavor with a new road, sidewalks, and utilities. Doak Homes has requested that the City extend the agreement. As was discussed with the Council in 2010, when the agreement was originally extended, Doak Homes faced significant pressure due to the "Great Recession." Like many homebuilders, Doak was unable to secure funding for construction or purchasers for the lots'. The homes constructed by Doak Homes are also providing the opportunity to test development standards for small lot development within Allentown. The agreement specified a maximum footprint on small Tots, maximum lot coverage, and design standards that are unique to small lot development. In the future, if the City Council chooses to develop specific development standards for the Allentown Neighborhood, the homes constructed under this agreement could provide a good template for possible future development standards. The original settlement agreement also required that Doak build homes in a specified order to prevent the creation of "orphan lots ". Doak has requested that this provision be removed so that homes can be built based on buyers' preferences. This is typical in large subdivisions, where homes are typically only built once a buyer has been secured. If the agreement expires, Doak will be required to comply with the zoning regulations in place at the time of submittal of a complete building permit application. Thus, on the remaining parcel, Doak would be required to construct homes on Tots that are at least 6500 square feet in area. Depending on lot layout, the remaining parcel could accommodate 5 to 6 homes under the current zoning regulations. The design of the homes would have to comply with the City's standard development regulations in the LDR zone, but the City would not have the ability to control specific design elements for individual homes as is accomplished by the Agreement. After the City and Doak Homes entered into the settlement agreement, the City Council adopted a requirement that all new single family homes be built with fire sprinkler systems. Since the development agreement was entered into prior to this code requirement staff did not require that Doak Homes install fire sprinklers in the new homes. With the expiration of the agreement staff has examined the feasibility of having the new homes install fire sprinkler systems; however, the newly laid private waterlines are too small to accommodate the required pressure for the fire sprinklers. If the agreement is extended, Doak will not be required to install fire sprinklers or replace the waterlines. 1 As was noted in the 2010 staff report the City Council: The current economic situation has impacted all construction in the City, especially single family construction. Even during the construction boom, the City's issuance of new single family home permits was low, on average about 30 new homes a year. However starting in 2007/2008 the City saw a marked drop off in the number of building permits being issued for new single family homes. In 2008 the City issued 7 permits for new single family homes; in 2009 only 2 single family building permits were issued (both permits were issued to Doak Homes); and for the current year, the City has only issued 2 single family building permits. Z:1DCD n Clerk's \BrandonIDoak\Doak Memo, Finance and Safety, 2013.06.26.doc 2 INFORMATIONAL MEMO Page 3 RECOMMENDATION The modified agreement will give Doak Homes an additional 36 months to attain building permits for the nine remaining homes. Staff also suggests that Doak Homes be permitted to build the homes as buyers are identified for the specific lots and not have to conform to building lots in a certain pattern. All other terms and conditions of the agreement will remain in place. The homes constructed will be some of the highest quality in the Allentown Neighborhood and staff believes that it is in the best interest of the City to extend the agreement in order to allow the additional homes to be built. Staff recommends that the Council authorize the Mayor to sign the amendment and that items be placed on the July 15th consent agenda. ATTACHMENTS Attachment A: Draft 2nd Amendment to Settlement Agreement Attachment B: Map Attachment C: Photos of Completed Homes Z:1DCD n Clerk's\Brandon\Doak\Doak Memo, Finance and Safety, 2013.06.26.doc 3 DRAFT SECOND AMENDMENT TO SETTLEMENT AGREEMENT BY AND BETWEEN THE CITY OF TUKWILA AND DARRYL DOAK, SR., ESTRELLA DOAK, DARRYL DOAK, JR., AND DOAK HOMES, INC. THIS SECOND Amendment ") is made between the CITY OF Washington municipal DARRYL DOAK, JR., "Doak"). AMENDMENT TO SETTLEMENT AGREEMENT (the "Second and entered into this day of , 2013, by and TUKWILA (hereinafter "City" or "Tukwila "), a duly organized corporation, and DARRYL DOAK, SR., ESTRELLA DOAK, and DOAK HOMES, INC. (hereinafter collectively referred to as WHEREAS, the City and Doak entered into that certain Settlement Agreement dated July 2, 2008; and WHEREAS, due to the economic downturn in the construction industry, on July 21, 2010, the Parties executed a First Amendment to Settlement Agreement extending the term for an additional thirt y -six months (36) to allow Doak additional time to complete the development; and" WHEREAS, the extended term is set to expire in July of 2013, but continued financial and economic challenges have further hindered Doak's timely completion of the development; and WHEREAS, the Parties desire to extend the Settlement Agreement for an additional term of thirty-six (36) months; and WHEREAS, the Settlement Agreement explicitly prohibits the creation of "orphan lots" and requires Doak to develop lots in either adjacent order or opposing order to prevent the creation of orphan lots, so Doak would also like to amend the Settlement Agreement to allow development of lots as buyers are secured; and WHEREAS, the City finds that it is in the best interest of the City to remove the "orphan lot" provision and allow development as buyers arise; NOW, THEREFORE, in consideration of the mutual promises acknowledged and set forth herein and the long -term benefit to both the City and Doak, the parties hereby amend said Agreement as follows: Doak v. City of Tukwila DRAFT Second Amendment to Settlement Agreement - 6/26/2013 Page 1 of 3 II. AGREEMENT 1. Section 30 of the Settlement Agreement, and Section 5 of the First Amendment of Settlement Agreement, are hereby amended to read as follows: 30. Expiration of Settlement Agreement. The Settlement Agreement shall expire 36 months from the date of mutual execution of the Second Amendment. Doak's obligations set forth in Sections 23 (Compensation) and 28 (Release) shall survive termination of this Agreement, and Doak shall be obligated to dismiss the Lawsuit and Appeal regardless of the lack of issuance of any building permit(s). Doak shall be entitled to develop the lots that are the subject of this Agreement in conformance with the terms of the Agreement so long as the building permits for the properties are issued before the expiration of the Agreement consistent with Section 20 and thereafter remain valid. Upon the expiration of this Agreement, however, any future development of the properties that are the subject of this Agreement and for which building permits have not been issued will be required to comply with all applicable standards of the Tukwila Municipal Code (TMC) in effect at the time of any future application. 2. This Amendment and subsequent amendments shall become effective immediately following execution by all of the parties. 3. Except as amended herein, the terms and provisions of the original Settlement Agreement and First Amendment of Settlement Agreement remain in full force and effect. IN WITNESS WHEREOF, the parties have caused this Second Amendment to be executed, effective on the day and year set forth on the first page hereof. CITY OF TUKWILA Jim Haggerton, Mayor DOAK HOMES, INC. Darryl Doak, Sr., Its President Date: Date: Doak v. City of Tukwila DRAFT Second Amendment to Settlement Agreement - 6/26/2013 Page 2 of 3 Estrella Doak, Its Vice President Darryl Doak, Jr., Its Project Manager Date: Date: Doak v. City of Tukwila DRAFT Second Amendment to Settlement Agreement - 6/26/2013 Page 3 of 3 7 Attachment "B" Doak Homes 9 ATTACHMENT "C" PHOTOS OF COMPLETED HOMES PARCEL 017900 -1731 Sold: September, 2010 Selling Price: $325,000 Attachment C: Doak Homes, Completed Homes 11 12 PARCEL 017900 -1730 Sold: August, 2011 Selling Price: $330,000 PARCEL 017900 -1756 Sold: May, 2010 Selling Price: $320,000 Attachment C: Doak Homes, Completed Homes 13 14 PARCEL 017900 -1755 Sold: January, 2010 Selling Price: $310,000 Currently Listed for Sale at: $335,000; 8% increase in value. PARCEL 017900 -4855 Sold: May, 2013 Selling Price: $249,000 Attachment C: Doak Homes, Completed Homes 15