State government got something, after all, for its contribution to a failed building project on Tacoma’s Hilltop: a vacant lot and the pile of debt attached to it.
The state Department of Commerce agreed in a June settlement, obtained by The News Tribune through a public records request, to take over the property at Martin Luther King Jr. Way and South 11th Street. Now it’s looking for a buyer.
The Martin Luther King Housing Development Association received no money for handing over the property to the state. But the deal freed the troubled nonprofit from its obligation to pay back its creditors and the tax man.
Commerce assumed those debts, and a spokeswoman for the agency said it has paid off many of them, including enough of the taxes to prevent foreclosure.
The MLKHDA spent a $4 million state grant without making good on its ambitious plans to build a mixed-use retail, office and housing center. The group blamed the economic downturn. But nearly half of the state money was misspent, according to a state review in 2009, the same year the group fired two of its executives.
Now Commerce wants to recover some of its lost money while also keeping in line with the project’s original goal, spokeswoman Penny Thomas said.
“We still wanted to preserve the opportunity for low-income housing and homelessness services up there,” Thomas said. “So by transferring — by taking ownership of the property — it was a much more streamlined path to making that happen.”
But housing isn’t the only possible fate for the site. Thomas said it could be one component alongside another use or uses, such as education, workforce training, community services or medical care.
The Evergreen State College showed interest when the property still belonged to its previous owner, said Jack Connelly, a member of the MLKHDA board, who wasn’t sure if such a deal was still in the works under Commerce’s ownership.
“At one point we were talking with Evergreen about putting a school there,” Connelly said. “There was some talk about putting a state-of-the-art facility there. … They loved the fact that it would be able to help develop the MLK Way corridor and build the Hilltop.”
The college’s current Tacoma campus is located a few blocks away, at Sixth Avenue and M Street. Evergreen spokeswoman Sandra Kaiser confirmed the college is looking to move.
“We’re in the process of looking for a permanent home for Evergreen Tacoma. Several options are under consideration,” Kaiser said. She wouldn’t say if the former MLKHDA property is one of those options.
While the school’s lease runs through November 2015, with the option to renew for five years, Kaiser said any rented spot is impermanent, “subject to a landlord’s choice.”
Several debts have yet to be settled on the state’s new property. Commerce has paid part of $139,000 in back taxes owed to Pierce County, according to the settlement, and Thomas said it plans to pay the rest. Another $446,000 related to cleanup of the site would be paid off upon the property’s sale, she said.
Among the bills paid, she said: $240,000 owed to architect Jon Graves and several smaller debts, mostly to utilities and engineers.
Thomas said the money is coming from the state’s Housing Trust Fund and Brownfields Revolving Loan Fund.
The transfer of the property and the debt leaves MLKHDA in a better position to get “back on its feet,” Connelly said, “and doing what it’s supposed to be doing, which is providing low-income housing for people in Tacoma, on the Hilltop.”Jordan Schrader: 360-786-1826 firstname.lastname@example.org