It was planned as a building conversion. What happened to Tacoma Tower project?
AI-generated summary reviewed by our newsroom.
- Tacoma Tower project stalled amid expired permits, financing woes and lawsuits.
- InterUrban Development tied to early work; property remains in LLC’s control.
- Court rulings awarded in defaults tied to unpaid work and lease issues.
Another ambitious apartment project in Tacoma has stalled, but a developer connected to the project hopes to make it work despite its current financial straits.
The 16-story former National Realty Building, 1119 Pacific Ave., was the West Coast’s tallest building when completed in 1912. The site was set to become the Tacoma Tower apartments, which would convert the office building into 63 market-rate units and office space, as well as ground-floor retail.
Those plans remain in limbo amid canceled or voided permits with the city and lawsuits against the property owner LLC seeking repayment of debts.
In 2022 the project gained an 8-year multifamily property-tax exemption at the same City Council meeting that also approved an 8-year MFTE for a separate project to bring new apartments to replace Graffiti Garages, 725 Broadway.
The 725 Broadway project evaporated as part of what what a U.S. Bankruptcy Court judge later deemed a Ponzi scheme tied to Bellevue-based investment firm iCap.
The owner LLC of the Tacoma Tower site is 111X Pacific LLC. The LLC’s listed governor in state corporate filings is an entity led by Rob Brewster of Spokane-based InterUrban Development.
Eric Stokes, a marketing representative for the firm, told The News Tribune in response to questions via email, “InterUrban has no ownership in the property — nor has it ever,” and declined to comment on litigation.
InterUrban’s website states, “All listed projects were performed in unaffiliated entities, by the president of the company, and not by the principals of InterUrban Development LLC. Architects, engineers, project managers and other key positions for development are contracted out based on individual projects and skill sets needed.”
In a follow-up email, Brewster clarified that “InterUrban provided the for-fee development services for the (Tacoma) project up and through submitting for permits with the City of Tacoma.
“The project ownership has yet to be able to move the project forward. InterUrban was voluntarily placed into receivership because of the significant fees it is owed on other projects — Tacoma not being one of those,” he added.
“To be clear, InterUrban completed the development work up through submitting for permits. Given the project ownership’s struggle with obtaining construction financing, there are no current services for the developer to perform.”
A search of King County Superior Court records shows InterUrban entered into a general receivership November 2024. Its receiver is Resource Transition Consultants of Lynnwood, one of the receiver entities involved at Point Ruston.
Buildings purchased
InterUrban made headlines in 2021 when it was announced it planned to redevelop the former National Realty Building/Key Tower. 111X Pacific LLC purchased the property for $6.5 million in November of that year.
The next month, 111X Pacific LLC purchased the neighboring 1123 Pacific Ave. and a parking garage across the street at 1114 Pacific Ave. for a combined $8.8 million.
The neighboring building, once the former National Bank of Tacoma and Tacoma Art Museum, dates to 1921, and the parking garage across the street dates to 1931.
In December 2022, the LLC gained its MFTE, with an estimated $12 million in construction costs, City Council was told at its meeting at that time.
Two years later, legal action began.
Noise, mold and broken elevator
Northwest Immigrants Rights Project filed a complaint in Pierce County Superior Court in June of last year over what it described as a dispute arising over “the conditions and tenantibility” of the site.
NWIRP said that from December 2017 to April 2024, it leased office space on the 14th and 15th floors of the building at 1119 Pacific Ave.
The complaint stated that in 2023 a dispute rose after the LLC “had begun a near total renovation and conversion of the building, causing significant construction noise and disruption to plaintiff’s business.
“Subsequent issues also arose regarding the inoperability and condition of the building elevators, the inadequacy of the HVAC serving the premises, and water leaks and mold in the premises,” it added.
It noted that the dispute continued into the following year when in April 2024 the two sides “entered into a written settlement agreement,” which called for a lease termination at the end of the month, and that the LLC would pay $150,000 broken down in various installments and “repair the broken elevators to allow plaintiff to recover its furniture and IT infrastructure ... .”
The complaint states that only one of the installments was received, late, and that the LLC “also failed to enter into a contract with an elevator repair contractor to enable recovery of plaintiff’s furniture from the premises.”
NWIRP sought $125,000 in unpaid settlement and replacement funds for furniture and IT infrastructure “unable to be recovered due to defendant’s failure to repair the elevators.“
NWIRP was eventually awarded more than $106,000 in a default judgment in August 2024 for its lost equipment and nearly $130,000 in an early partial judgment for the unpaid settlement, with both amounts including attorney costs and fees.
No filings were on record from the LLC’s attorney in the case. NWIRP, now with an office on North Pearl Street, did not respond to a request for comment. In the last public filing listed in the case entered January 2025, attorneys for NWIRP notified the court of their withdrawal as counsel for the entity, stating, “No trial is pending.”
Loan default
Ten days after NWIRP filed its complaint against 111X Pacific LLC, a second lawsuit was filed, this time by Key Tower project lender KHRE SMA Funding LLC, affiliated with Knighthead Funding of Connecticut.
The lender’s complaint said its original $9.94 million loan from December 2021 had been modified two times to accommodate the borrower, who ultimately defaulted.
“As a result of 111X’s failure to repay the note in full at the maturity date, there is a continuing event of default under the Deed of Trust. KHRE is, therefore, entitled to a judgment foreclosing its interest in, and directing the sale of the property, as provided by applicable law,” the complaint stated.
That case has included liens filed by other contractors for unpaid work. In early August, the lenders filed a motion seeking summary judgment.
In a defense filing, attorneys for the 111X Pacific LLC and other defendants in the case contended among other issues that the lender “induced 111X Pacific LLC to sign the loan documents with false statements of material facts and omitted material facts the disclosure of which was necessary to make other statements not misleading.”
They also cited “impossibility and impracticability because of the occurrence of events which were fortuitous and unavoidable by defendants, including destruction of specific financing opportunities which were necessary for the performance of the loan Agreement and the debt guaranty.”
The lender, in its motion for summary judgment this month, pushed back on the claims, particularly the “impossibility and impracticability” defense, stating , “While it may be difficult or expensive for defendants to perform, such difficulty or expense does not provide grounds to set the debt guaranty aside under applicable law.”
As for the fraud accusation, the lender’s attorney stated that the defendants “failed to state any basis factual for this affirmative defense, which, in any event would have been waived under the debt guaranty.”
Oxford Market issues
The third case was filed in January of this year by Ferguson Architecture of Tacoma, and, one year after the NWIRP ruling, also received a default judgment.
In a court filing, the firm contended that in 2022, the Tacoma Tower developers sought to connect two of their three buildings at the site to create “a single 14,000 square-foot public food hall on the first floor called the Oxford Market.”
The firm performed design work on the project, but invoice payments stopped in May 2023, according to the filing. The complaint stated that the firm continued the work “in good faith ... to keep the project moving,” and also took on additional “design services for a tenant test-fit at another property located at 1114 Pacific Ave.”
The unpaid invoices at the time of the complaint totaled more than $60,000.
A motion for default judgment was filed in July against the LLC, Brewster and Steve DeWalt, also of InterUrban, contending Brewster and DeWalt “used the corporate form of 111X to evade or violate a duty and abused the corporate form through fraud, misrepresentation and manipulation, including retaining Ferguson’s services despite knowing the corporation was undercapitalized ... .”
“Defendants have failed to appear, plead or otherwise defend against plaintiff’s complaint and the time to do so has expired,” the motion stated.
The motion was granted in August along with attorney’s fees and interest against the LLC, Brewster and DeWalt. A final judgment award with an updated total of more than $106,000 to account for additional interest and attorney’s fees and costs is now sought by the architecture firm.
Alan Schuchman, attorney for the architecture firm, declined further comment when contacted by The News Tribune.
“Unfortunately, I am not comfortable commenting on ongoing litigation at this time,” he said via email.
So far, there are no attorneys listed in the case for the LLC, Brewster or DeWalt.
Will Tacoma project move forward?
111X Pacific LLC purchased the former Key Tower in Tacoma, 1119 Pacific Avenue, in November 2021 for $6.5 million, below its marketed $8.5 million price. The following year, the developers received an 8-year MFTE for the office-to-apartments conversion project. In its filing at the time, the proposed rents ranged from $1,800 for 550-square-foot one-bedroom, one-bath units, to $2,750 for 900-square-foot live/work units.
Maria Lee, media representative for the City of Tacoma, confirmed with The News Tribune via email in response to questions that the project’s permits have expired, with the MFTE also nearing expiration.
“Last December, the applicant had reached out to inquire about the process for permit extensions. The project’s MFTE is set to expire this December. They have the option to apply for a two-year extension,” she wrote.
“We have not received any recent communication from the applicant,” she added.
A statement provided by Stokes of InterUrban blamed the site’s issues on “Rising interest rates, construction costs, and a lender that chose not to move forward,” as factors in the stalled project.
“Tacoma’s decision not to adopt the state’s office-to-residential tax exemption, along with recent local landlord regulations that add uncertainty for lenders has also made financing more difficult here than in other Washington cities. Ownership remains committed to finding a reliable lender and moving the project forward,” the statement added.
City Council has not taken a vote specific to Senate Bill 6175 related to the office-to-residential tax break, which was signed into law by the governor in 2024. The initiative authorizes cities to create a sales-and-use tax deferral program for developers to convert commercial buildings into affordable housing.
Lee pointed to other city programs and incentives, including its Home in Tacoma housing initiative, as well as “a 1/10th of 1 percent sales tax dedicated to affordable housing initiatives. Our well-established MFTE program encourages the development of new residential units as well as conversions, including those with affordable components.”
“The City has taken a balanced, multi-pronged approach to creating more affordable housing that’s tailored to Tacoma’s specific needs,” she wrote. “So far this year, developers have submitted a significant number of new housing applications, proposing hundreds of new units, many of which are leveraging the new rules to build a wider variety of ‘missing middle’ housing options like townhomes, duplexes, and backyard cottages.”
“This initial uptake highlights the strong demand for diverse housing and the effectiveness of our new zoning,” Lee added.
Most recently developers behind the former DaVita building, 1423 Pacific Ave., announced financing for the final phase of their own office-to-apartments conversion, Sanberg on the Ave.
Brewster remains optimistic the Tacoma Tower project at some point will still take shape.
“We are hopeful that construction financing can be obtained, and the project moved forward,” he told The News Tribune via email. “Tacoma Tower is an office-to-residential conversion; it was envisioned to meet our region’s housing crisis and be a positive piece of revitalizing downtown Tacoma.”
This story was originally published September 11, 2025 at 5:00 AM.
