The City of University Place has reached a tentative agreement with a Tacoma developer that wants to build a five-story building with 100 apartments and retail space at Town Center, officials announced Thursday.
The project will be presented and discussed during a City Council study session Monday at 6:30 p.m. The council is expected to vote on the purchase-and-development agreement Sept. 26.
The announcement is encouraging news for city officials who have long sought the first private tenant for its 17-acre property along Bridgeport Way – and for a return on the tens of millions in public dollars invested in the project.
Residents have expressed frustration with the stalled project, intended primarily to to build the city’s tax base. The University Place Pierce County Library is the only tenant so far.
But city officials Thursday made a point to tamp down expectations. Late last year, they drank sparkling cider to celebrate an agreement to bring an Applebee’s restaurant to Town Center, only to watch the deal collapse in July.
“We’re not trumpeting a done deal by any stretch,” said City Attorney Steve Victor, the city’s chief Town Center negotiator. “This is an opportunity, and it’s an opportunity that we’re inviting discussion on.”
Under the proposed agreement, the city would sell the development rights atop the parking garage on the north side of the new civic and library building to SEB Inc. for $800,000 in cash. Permit fees would bring in at least another $250,000, Victor said.
In return, the developer would construct a five-story building with 100 market-rate apartment units and 12,000 square feet of ground-level retail space.
There are no retailers attached to that space at this time, city officials said.
The agreement is contingent on the city finishing work on the parking garage for an estimated $1.5 million. The city intends to pay for it from more than $5 million in bond revenue it recently secured.
The developer would spend about $1.5 million to construct a steel and concrete foundation atop the garage to support the building.
If the city decides to sell the buildable land atop the parking garage on the other side of the civic building, the agreement requires it to first offer it to SEB for proposed construction of an additional 80 to 100 apartment units.
A SEB representative didn’t return a phone message seeking comment.
Founded in 1990, SEB started out building affordable housing units for housing authorities in Pierce and Kitsap counties. It later shifted to developing higher-end apartments, according to its website.
Mike Scott, partner and owner of Dupre + Scott, a Seattle-based apartment market analysis firm, said SEB has built apartment complexes in Pierce and Thurston counties.
“They’ve been around for a long, long time,” he said. “They have a good track record.”
If the sales closes in UP, Victor said the developer’s representative has indicated it wants to break ground during the first three months of 2012. The apartments could open by fall, he said.
The vacancy rate for newer apartments in the University Place and Fircrest is 2.9 percent, an indicator of strong demand, said Scott. There been one 29-unit apartment complex built in the market area during the last 10 years, he said.
The success of attracting retail is an open question.
City officials have pushed hard for several years to attract retailers to the property, but City Manager Steve Sugg said the community’s vision for Town Center also calls for residential uses.
Building apartments could induce retailers to follow because they wouldn’t be the first to move in and could draw residents living above, officials said.
“This does bring energy and life into the center,” Sugg said.
Attracting standalone retail to the lot has been challenging because it doesn’t front Bridgeport Way and would become less visible to passing motorists as Town Center develops incrementally, Victor said.
“The apartments make the retail possible,” he said.
Filling ground-level retail has been challenging in the South Sound’s poor economy. The Tacoma City Council voted Tuesday to allow a medical clinic in the ground floor of the downtown Pacific Plaza – the second time Tacoma leaders made an exception for what was originally envisioned as retail space.
If that weren’t daunting enough, there are obstacles to finalizing the UP deal.
Victor wrote in a staff report that the agreement’s terms “represent an integral whole and cannot be renegotiated separately.”
City Councilman Ken Grassi didn’t buy that. “It’s got to be a negotiable deal or it’s not going to come to be.” However, the fact that the developer is pushing an aggressive timeline, rather than the city, instilled confidence in him, Grassi said.
Christian Hill: 253-274-7390
christian.hill@thenewstribune.com
Twitter: @TNTchill
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