The Tacoma City Council took a step Tuesday toward buying an 0.8-mile strip of land along Commencement Bay for $6 million, a deal that would be sealed after a developer turns it into a public esplanade.
As part of the agreement, approved by the council without dissent, the city will finance $5 million worth of improvements to create the so-called Waterwalk, which developer Point Ruston LLC says it will build by December 2012.
In all, the city budget for financing Point Ruston infrastructure improvements grew Tuesday to $28.7 million from $15.5 million, with the increases covering the esplanade and a shortfall caused by higher-than-expected costs on the luxury development. As part of the deal, the city also will reimburse the developer’s costs more quickly.
The agreement helps the developer with cash flow and could kick-start construction that has been all but stalled on the $1 billion housing, hotel and retail project at the old Asarco smelter site.
In return, the city gets an extension of the bayside pedestrian walkway to Point Defiance Park. City officials said it’s a great deal, especially since the developer would be required to use the proceeds from the sale to pay down its debt to the city.
“When all is said and done, you’re getting eight acres of waterfront property and $10 million in construction for $6 million,” city Public Works Director Dick McKinley said.
The city will finance half of that construction, using more of the Local Improvement District bonds approved for Point Ruston in 2009. The financing scheme allows money to be borrowed for the private development at the city’s lower interest rate, with the bonds paid back over the next two decades by owners of the property.
The bonds will take care of a 50-foot-wide, 4,300-foot-long strip along the water. Improvements on the next 50 feet would be paid for by property owners.
Without the new agreement, all of the improvements would have waited for the property owners.
Some council members have questioned just what the city would get for its money by buying the land. City law already requires a 15-foot public easement on the land, and an agreement with Point Ruston calls for a 100-foot easement.
But that 100 feet of access isn’t necessarily permanent, McKinley said. By buying the property, the city would guarantee it forever, barring a vote of the people, he said.
The deal satisfied council members, who approved it 8-0 with Councilman Spiro Manthou absent.
“I’m confident that with this partnership that we can move forward, and hope that certainly this will be the last of any kind of agreements that are necessary for this project,” Councilman Jake Fey said.
McKinley said city officials asked an appraiser if the land was worth at least $6 million and were told that it was – but they haven’t yet ordered a formal appraisal.
Mike Cohen, managing partner of Point Ruston, called it a “sweetheart deal” for the city that speeds up the improvements by years while also helping his company with cash flow.
“I think it was good, smart negotiating on the city’s part to solve needs that will benefit the infrastructure out in our area,” Cohen said in an interview.
That infrastructure will include streetlights, benches, landscaping and shoreline structures.
Mark Martinez, executive secretary of the Pierce County Building and Construction Trades Council, told the council Tuesday that its help with the project would create well-paying construction jobs.
This article originally found in The News Tribune.