Redeveloping one of the nation’s most polluted industrial sites into an upscale waterfront community would be challenging enough on its own, but Mike Cohen also has had to contend with a host of other issues in pushing forward with his billion-dollar plan for Point Ruston.
“I can only assume I am being punished for a former life. I must have done something wrong and was made a developer to serve penance,” he jokes.
Located next to Point Defiance Park on Commencement Bay on the northern edge of Tacoma, Point Ruston is the site where Asarco formerly operated a copper smelter. Two years ago, Cohen negotiated an agreement with Asarco and the Environmental Protection Agency to clean up the heavily contaminated property, clearing the way to redevelop the Superfund site into a mixed-use residential community.
Cohen has started construction of the first phase: He believes it will take 10 years to add hundreds of new, upscale households, dozens of shops and restaurants, a hotel and a new office building to the tax rolls of the neighboring communities of Ruston and Tacoma.
Getting the project to this point wasn’t easy.
With the property partly in the City of Tacoma and partly in the Town of Ruston, Cohen had to work with two jurisdictions.
“It’s more than double the work,” he said. “There is so much effort with a project like this. Two separate negotiations are extremely time-consuming and draining.”
What keeps him going is the rare opportunity to develop a site with nearly a mile of low-bank waterfront.
It took Cohen nearly a year to negotiate the sale with Asarco. The site had been used as a copper smelter since the late 1800s, producing 10 percent of the country’s copper during World War II. Asarco shut the smelter down in the 1980s. After the EPA declared the former smelter a high-priority Superfund site, Asarco spent more than $100 million on its cleanup.
Purchasing the property meant Cohen had to negotiate with the federal agency to assume Asarco’s liability for the remainder of the cleanup. When Asarco filed for bankruptcy, Cohen then had to negotiate with Asarco’s creditors as well. In addition to money, all of this cost Cohen time.
“The good news portion of that story is that we made good use of that year to do a lot of advance planning,” Cohen said. He was able to work out a master plan with Ruston officials that combined waterfront condominiums with office and retail space and, farther from the water, single-family homes with a view of the bay.
When completed, Point Ruston will add nearly 1,000 new households to the community. The two municipalities have negotiated an interlocal agreement under which Tacoma will take the lead in overseeing development of roadways, sewers and utilities at the site, said Martha Anderson, assistant director for Tacoma’s community and economic development department.
Cohen tried and failed to obtain a tax break from Tacoma for developing multifamily units. The city decided Point Ruston did not qualify because it is not in an urban growth area.
David Graybill, CEO of the Tacoma-Pierce County Chamber of Commerce, said Point Ruston is a “long hoped-for outcome” for the community.
“To go from a contaminated site to one which would host both residential and business activities has certainly been the goal of the surrounding communities and nearby towns,” Graybill said. “It will complete the community vision to keep that beautiful waterfront open to the public.”
Graybill believes the 10-year phased project will be able to withstand the current economic slowdown.
“The quality of Mike’s developments are a known quantity in our community,” Graybill said.
Located near Point Defiance Park, the Point Ruston site includes almost a mile of mainly low-bank shoreline. It contains a total of 55 acres of waterfront property and 12 acres of upland property. Additionally another 30 acres of marine property potentially can be developed into a marina, Cohen said.
Although Cohen declined to identify his financial backers, he did say his development group, Point Ruston LLC, includes substantial private investment. Point Ruston LLC paid slightly more than $6.2 million for the property and assumed an estimated $30 million in liability, along with a $20 million payout agreement under which he will make an annual payment to Asarco and its creditors as Point Ruston LLC obtains permits.
He anticipates little difficulty working with city officials, especially since Tacoma has assigned a group of people to help speed permitting.
“Both jurisdictions fully understand the benefits of working with us on the site. They will finally see its complete remediation and have it back on the tax rolls,” Cohen said.
He has started construction of the first phase of the project, which includes 99 condominiums and 20,000 square feet of commercial space. So far he has 35 reservations for the project, which opens next fall. He hopes to break ground on the second condo building in 2009.
The Silver Cloud hotel chain has made a “firm commitment,” according to Cohen, to open an upscale 175-room resort hotel on the property. Silver Cloud also plans a restaurant, lounge and 12,000-square-foot conference facility. In addition to the hotel, Point Ruston plans to complete some 60,000 square feet of retail by 2011.
Cohen said he plans to build the remaining shops and restaurants as the market demands, and use revenue from sales of the condos to finance future office and retail development. The 250,000 square feet of office space will be built once he has an office tenant in hand. He is hoping a small to midsized firm will want to have its headquarters in the complex. The marina will be completed in a later phase.
While traffic remains a concern for the city of Tacoma, which continues to work with Cohen to reduce potential congestion problems on Ruston Way, Anderson said one of the benefits for Tacoma is that Point Ruston will include a public esplanade along the waterfront.
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