COUNCIL DATE 8/14/07 AGENDA ITEM 6A

CITY OF OLYMPIA Olympia, Washington CITY COUNCIL MEETING August 14, 2007 SUBJECT: Mixed-Use Housing Purchase & Sales Agreement with Colpitts Development Company, LLC for property at 5th and Columbia Streets. Olympia City Council Steve Friddle, Community Services Manager, (360) 753-8591 sfriddle@ci.olympia.wa.us Tom Morrill, City Attorney, (360) 753-8449 tmorrill@ci.olympia.wa.us Subir Mukerjee, Asst. City Manager (360) 753-8066 smukerje@ci.olympia.wa.us Authorize the City Manager to execute the attached Purchase and Sales Agreement with Colpitts Development Company so that additional site environmental work will commence and if necessary, final negotiations on the sale of the property can be completed. Option 1. Approve the Purchase and Sales Agreement selling the City owned Columbia Street surface parking lot between 4th and 5th Avenues to Colpitts Development Company, LLC. 1. Purchase & Sales Agreement 2. Map The agreed sales price is $270,000. The agreement provides that without further negotiations, the City’s responsibility for environmental characterization and remediation of soil contamination on the property and the relocation of the existing utility service will be capped at $270,000. Source of funds for clean-up and utility relocation will be from sale proceeds. Subir Mukerjee, Assistant City Manager Colpitts Development Company Olympia Downtown Association Developing mixed-use housing projects in downtown Olympia has been a Council priority for several years. In addition to the benefits of expanding the downtown housing stock, the primary goal of our efforts has been to demonstrate the local market demand for a broader range of market rate ownership and rental housing units.

ORIGINATED BY: STAFF CONTACT:

REQUESTED COUNCIL ACTION:

STAFF RECOMMENDATION:

DOCUMENTS ATTACHED: BUDGET IMPACT & SOURCE OF FUNDS:

PRESENTERS AND OTHERS NOTIFIED:

BACKGROUND:

Based upon experience of other communities, it is anticipated that additional housing projects may follow. When the Kauri Investments Purchase and Sales Agreement expired, the Colpitts Development Company stepped forward. The requested Council action for this item is for Council to authorize the City Manager to execute the attached purchase and sales agreement so that additional site environmental work will commence and if necessary, final negotiations on the sale of the property can be completed. ANALYSIS AND OPTIONS: Colpitts has successful mixed-use housing development experience within the region. Subject to detailed environmental and site design feasibility analysis, Colpitts proposes to construct a development consisting of approximately 120-market rate apartments (a range of studio, 1 bedroom and possibly 2 bedroom units) on the City owned Columbia Street surface parking lot between 4th and 5th Avenues. The project would also include two floors of parking and some ground floor retail. The attached Purchase & Sales Agreement (PSA) has the following key components: • Colpitts pays the City $270,000 for land: The property is conveyed with a deed restriction requiring construction of a mixed-use project. (Page 1, Sections 2.a & 3a-c). The sale is to occur within 120-days of approval of a clean-up plan by Department of Ecology and not later than December 31, 2008. Environmental site clean-up: Colpitts will proceed immediately to develop an environmental clean-up plan for submittal to the State Department of Ecology. Based upon the remedial action plan, cost estimates will be prepared. The cost of the remediation plan and clean-up will be deducted from the purchase price. Colpitts would be responsible for any environmental remediation that must be done at the property. If any contamination is discovered to have migrated beyond the property boundary, the parties will attempt to reach an agreement on which party will perform any remediation work necessary from the property boundary out to the center-line of the adjoining streets, and then the City would have responsibility for addressing any contamination issues beyond that point.

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If clean-up costs are projected exceed the $ 270,000 cap, either the buyer or City may terminate the agreement and the City would reimburse up to $30,000 of the buyer’s environmental remedial action plan costs. • Sewer main relocation. Also included in the cap are costs associated with relocating the existing sewer that bisects the site. Option 1. Approve the Purchase & Sales Agreement with Colpitts for the half block Columbia Street surface parking lot located between 4th and 5th Avenues. Pros 1. The Agreement is consistent with the City Council’s “Focus Area to Invest in Downtown so that more people live, work, learn, shop, play and enjoy downtown Olympia.” 2. Expands the downtown housing stock. 3. Furthers the primary goal to demonstrate the local market demand for a broader range of market rate housing. 4. The property will be added back to the tax roll. Cons: 1. There will be a loss of downtown parking. 2. Construction of the project will impact to pedestrian circulation. 3. Loss of public ownership of the parking lot and the stream of parking revenue. Option 2. Revise one or more of the terms of the PSA. Pros: 1. The Council may determine that one or more of the terms in the PSA is not acceptable and modify or delete it. 2. The Council may identify specific issues or terms that might be added to the PSA. Cons: 1. Extension or delay in contract negotiation. Option 3. Deny the PSA. Pros: 1. Unknown at this time. Cons: 1. Appears inconsistent with Council Focus Areas.

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