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Kenmore City Council approves residential development agreement
The Kenmore City Council approved a residential development agreement for construction on the Kenmore Village property, at a council meeting Dec. 9.
The city has a purchase and sale agreement with a subsidiary of MainStreet Property Group LLC for residential development of the 4.75 acre upper portion of Kenmore Village.
“This project is expected to bring more than $20 million in new investment to the core of our downtown," said Mayor David Baker. "It is a major step forward in realizing our downtown vision.”
The development agreement and related site plan establishes development requirements including design standards, affordable housing, multifamily housing property tax exemption, impact fees, phasing and vesting.
“We would like to thank the city staff and Council for their efforts on moving this project another step forward toward reality,” said Kelly Price, President of MainStreet Property Group LLC. “We are excited to bring new, modern and high-quality apartments and townhomes to the city of Kenmore and look forward to breaking ground.”
Development of up to 325 residential dwelling units can occur over two phases, although MainStreet currently plans on constructing approximately 220 units between the two phases. Around 25 percent of the units will be affordable at 85 percent of King County median income. At least five of the units will be affordable at 50 percent of King County median income. MainStreet anticipates being under construction with phase one in the spring/summer of 2014.
Phase one development includes 138 dwelling units, four separate buildings ranging from three-to-five stories in height, consistent with allowable height in the downtown residential zone, 148 parking stalls, street frontage improvements on 68th Ave. N.E. and N.E. 182nd St. and first class resident club-houses, fitness and bicycle facilities.
“In just five short months, the city and MainStreet went from a purchase and sale agreement to an approved site plan and development agreement," said Kenmore City Manager Rob Karlinsey. "In my career, I have never seen a project of this magnitude move so quickly and efficiently."
At that same Dec. 9 meeting, the city council approved an amendment to the purchase and sale agreement for the property. The amendment adjusts the purchase price to account for several off-site improvements that MainStreet has agreed to construct, including full-width asphalt overlays, an upgraded pedestrian crossing on 68th Ave. N.E., utility undergrounding on 68th Ave. N.E. and the construction of a new stairway on the adjacent south property. The amendment also allows for one remaining contingency item to be resolved by March 2014.
During the first half of 2013, the city listed the Kenmore Village properties for sale and received 16 offers, including more than eight offers for the three acres of commercial property. The city evaluated the various offers and in June of 2013, members entered into a purchase and sale agreement with the Benaroya Company and Real Property Investors (BCC-RPI) for the lower, commercial portion of the Kenmore Village property. The agreement included a 6-month due diligence period, during which BCC-RPI could evaluate the property and seek tenant interest in the property.
“Although we did see tenant interest in the property, including medical office, we were not able to secure enough tenants during the due diligence period to justify purchasing the property," said Mike McKernan of BCC-RPI. "We have enjoyed working with the city and wish them the best as they continue in their efforts toward the city’s downtown goals and vision."
The due diligence period has recently expired, and neither BCC-RPI nor the city has elected to extend the agreement or move forward to closing. While the city continues to stay in communication with BCC-RPI, the city also now has the ability to reach out to other potential buyers, including those that made offers on the property earlier this year.
“Our working relationship with BCC-RPI continues to be amicable, and our communication lines are open," Karlinsey said. "We are appreciative of the work and due diligence that BCC-RPI has done on the property. Thanks to their work, we know even more about the property and its market potential."
Karlinsey and the real estate broker, Colliers International, Inc., will review its list of offers on the property received earlier this year and assess the interest level of one or more of those buyers. The city will provide a verbal update and make recommendations for next steps to the council at a public meeting in January or the first part of February 2014.
“Given the strong buyer interest in the property that we saw earlier this year and the improvement of the overall economy, we remain very optimistic,” Baker said. “We continue to hold fast to our goals for the downtown, including creating a sense of place and a signature ‘town green’ in Kenmore Village that will create a special public gathering place.”
The development agreement and other documents are available for review on the city’s website at www.kenmorewa.gov/downtown. For questions, contact Associate Planner Andrew Bauer at 425-398-8900 or firstname.lastname@example.org.