Title
Resolution Concerning Columbia Street Downtown Housing Project
Recommended Action
Committee Recommendation:
Not referred to a Committee.
City Manager's Recommendation:
Adopt the attached resolution authorizing the City Manager to prepare and sign the necessary documents that are based upon the conditions and provisions set forth in the attached resolution, which are intended to clarify the City's contribution toward remediation, the protections the City will receive and the area covered by the restrictive covenant.
Report
Issue:
Should Council adopt a resolution authorizing the City Manager to prepare and sign the necessary documents concerning the property on Columbia Street between 4th and 5th Avenues that clarify the City's contribution toward a cleanup of the site, that clarify the protections the City will receive concerning potential liabilities at the site, and that modify an existing restrictive covenant on the property to allow a smaller scale market rate housing project on a portion of the property?
Staff Contact:
City Manager Steve Hall, 360.753.8370
City Attorney Tom Morrill, 360.753.8338
CP&D Director Keith Stahley, 360.753.8227
Presenter(s):
City Manager Steve Hall
Background and Analysis:
In 2008 the City of Olympia agreed to sell property on Columbia Street between 4th and 5th Avenues to a private development firm for the purposes of building a market rate housing project on the site. In order to encourage downtown housing and address potential environmental liability, the City agreed to participate in the environmental clean-up of the site and to sell the property for the express purposes of developing housing. As part of the agreement, the City placed a restrictive covenant on the deed for the property that limited the use of the property to a mixed use development comprised of: a commercial/retail/office component at street level; a market rate multi-family residential component; and associated parking. After the transaction was complete, the purchasers of the property spent considerable time attempting to locate financing to construct the project. However, due to economic conditions, the purchaser was unable to find adequate financing to complete the project.
A new development partnership, the Berschauer Group, has indicated an interest in building market rate housing on the property. However, given the market conditions in downtown Olympia, they are only willing to pursue a smaller scale project that is limited to housing and would provide between 30 and 60 units on approximately half of the property. City staff have been working with the Berschauer Group to clarify the types of changes that are being requested to the City's restrictive covenant and the other conditions that are being requested to allow the project to proceed on a smaller scale. Attached is a letter dated October 31, 2012 from the City Manager to the Berschauer Group outlining staffs' understanding of the conditions being requested and a response from the Berschauer Group dated November 2, 2012 providing further clarification concerning elements of the Berschauer Group's proposal. In the Berschauer Group's November 2 letter, they clarify that they are requesting the following:
1. An exemption from the construction of retail space as part of the project. Staff Response: Currently there is no code requirement for retail space, at this location; however, there are City design requirements to create street level architecture in this location. The requirement in the restrictive covenant to develop retail space was based on the previous design and does not need to be included in a restrictive covenant for the property if Council accepts this proposal. Therefore, no exemption from the construction of retail space is required, but the restrictive covenant will need to be modified to remove that requirement. Any project on the property will be required to meet the City's Design Review criteria and all other applicable development regulations.
2. Written acknowledgement that the City will participate in pursuing environmental clean-up cost recovery from previous owners. Staff Response: City staff recommends that the City agree to participate in these efforts but not agree to contribute any additional financial support for these efforts.
3. Clarification that the City's participation in site clean-up will occur with the first dollar of expenditures and that reimbursements will cover remediation costs incurred within the property boundary and within the right-of-way beyond the property boundary, and commitment of a similar out funding toward cleanup costs as was committed by the City for the previous proposed development. Staff Response: Staff recommends agreeing with this request concerning the use of the funds in the right-of-way, but staff recommends that the City's contribution be limited to existing funds available for remediation work on this property. The City's reimbursement would begin with the first dollar spent by Berschauer on related environmental clean-up costs on the site and could include remediation work associated with utility trenches and the like. The City has approximately $450,000 in available funds for site remediation work, which is $43,000 less than was committed toward the previous proposed development.
4. That Lots 1 and 4 be the legal parcels which the City will agree to release from the restrictive covenant. Staff Response: Staff recommends releasing Lots 1 and 4 from the restrictive covenant.
Neighborhood/Community Interests (if known):
Staff has had several conversations with representatives of Olympia Federal Savings Bank (adjacent neighbor) concerning this revised proposal. While the land that is released from the restrictive covenants could assist Olympia Federal Savings Bank in the redevelopment of its property, they are not party to this agreement between the Berschauer Group and the City of Olympia.
Options:
1. Adopt the Resolution and direct the City Manager to prepare and sign documents to finalize the agreement.
2. Amend the Resolution and elements of the agreement.
3. Reject the Resolution and do not proceed.
Financial Impact:
City funds to participate in the environmental clean-up of this site are available within the budgeted Capital Facilities Plan. No other direct costs to the City are anticipated.