TOD will start soon in Burien
By MARC STILES, Daily Journal of Commerce Staff Reporter
After years of false starts, a transit-oriented development will start construction next month in downtown Burien.
Meanwhile, city officials think the stalled private portion of Burien Town Square may be back on track in the coming weeks thanks to an infusion from private equity investors, including Starwood Capital. That condo-retail project has been on hold since last fall when federal regulators shut down the construction lender, Chicago-based Corus Bank.
“We hope this period of paralysis is over,” said Burien Economic Development Manager Dick Loman.
Loman said an announcement from Los Angeles-based Urban Partners — developer of the 124 condos and retail space — could be made in the next couple of weeks. The Federal Deposit Insurance Corp. partnered with a group called ST Residential to take over this and other projects Corus had been involved in. Starwood is among the investors in ST Residential.
Urban Partners did not return calls for comment.
The transit-oriented development is a public-private partnership between King County Metro and a joint venture of two California companies: Alliance Property Group of Los Angeles and Wasatch Advantage Group LLC of Mission Viejo. The JV was selected through a competition.
First up for the JV is construction of a $20.5 million, 466-stall garage. The goal is to expand parking for the transit center, which is served by numerous Metro bus routes as well as a Sound Transit Express route. An apartment building with some retail is also part of the development, but the JV and Metro mutually agreed to put the apartments on hold due to the recession, a county official said.
While not a city project, Metro's transit-oriented development is a key part of the city's urban redevelopment plan, Loman said. Housing is badly needed for teachers, police officers and retirees who no longer drive “but need to be in the middle of things.”
He said another bonus is well paying, though temporary, construction jobs. “The dynamics of this thing and the timing are excellent,” Loman said.
Alliance Property Group President Danielle Curls Bennett said Watry Design is the garage architect, and Charles Pankow Builders is the general contractor.
Metro and Alliance will sign an exclusive agreement that will let the company negotiate a development deal for the apartment-retail project, according to Andrew Glass-Hastings of the county Department of Transportation. He said the project will have at least 80 apartments, including 24 affordable units, and 4,000 square feet of retail. As the parties wait for the housing market to rebound, Alliance must pay the county $5,000 a month to hold the development rights.
The garage is expected to be done in early 2012, according to Glass-Hastings. Bennett hopes to start construction on the apartment/retail building when the garage is done.
“I think perhaps that is a little aggressive,” she said, but “it wouldn't be unheard of to start conceptual work” in 2011 or 2012. Bennett said she and her partners are putting together a design and construction team for the mixed-use building.
Financing in place
The TOD project has been in the works for several years. Initially, it was included in the 2007 roads and transit measure that voters rejected. A year later voters approved the Sound Transit 2 measure, which has $14.7 million for the project. The county also obtained a federal grant for the project.
Technically, there's no public money for construction of the garage, and Alliance-Wasatch got a loan from Wells Fargo. The lender, however, has some assurance that Sound Transit and the federal government ultimately will back the cost of the development.
Once the garage is done, the county will use Sound Transit and federal money to buy it back for the already negotiated price of just over $20.5 million, Glass-Hastings said. The county will operate the garage.
Alliance-Wasatch has done similar projects. Bennett said the return on these projects is typically 5 percent to 10 percent. The risk for the developer is that costs could exceed the guaranteed buy-back price that the JV negotiated with the county, she said.
Bennett said her company learned about the project when it was considering a hotel/conference center on a piece of city-owned property in Burien. After the recession halted that project, the deal with the county came up. Bennett said Alliance-Wasatch has done various public-private projects with affordable housing in them.
“[The Burien project] seemed to be a perfect fit for what we brought to the table,” she said.
Bennett said Wasatch Advantage Group is an affiliate of Utah-based Wasatch Development Associates, which owns a large block in downtown Bellevue where it developed two condo towers called Washington Square.