‘We Can Be Proud Of What We Did’ – Town Square Developer Dan Rosenfeld
As work on the six-story condominium/retail complex in Town Square neared completion, principals of Urban Partners held their breath, month by month, until troubled Corus Bank of Chicago paid each draw on the construction loan.
“The good news is we made it to completion. They funded every construction draw,” Dan Rosenfeld, a founder of Urban Partners – Burien’s private developer for Town Square, told The B-Town Blog last week. “Then they went bust.”
Corus Bank was closed and its assets seized by the Federal Deposit Insurance Corporation on Sept. 11. Now the Urban Partners construction loan is held by a joint venture of Starwood Capital Group and the FDIC.
“If we do nothing else in our lives, we can be proud of what we did with this project in this community,” Rosenfeld continued. “In our hearts, we know we have done a great thing in Burien. We took empty parking lots and turned them into a world-class project.”
But the condo/retail complex – which opened last June at the same time as the new Burien City Hall/King County Library – remains only partially occupied with six residential units sold, due to complex financial entanglements completely removed from the control of Urban Partners.
“Every sale or lease of space requires lender approval,” Rosenfeld said. But since the failure of Corus Bank, “there is no one to approve leases or sales. There is no one to even approve prices.”
Starwood currently seems”unwilling or unable” to do that, “but this won’t last forever,” he continued. The financial issues resulting from the bank failure will be resolved, and he expects that most of the condos will be sold and the retail space leased or sold by the end of this year.
Although no longer a principal with Urban Partners, a Los Angeles-based development company, Rosenfeld remains involved with Town Square as “an active partner and investor” through Urban Ventures – a related company that actually owns this property with other investors.
[Note: Because Urban Partners submitted the original private proposal for Town Square, the name Urban Partners is used throughout this story.]
Rosenfeld became concerned in 2007 “that the real estate market was increasingly fragile, and we needed to take a more conservative approach. It was time to get out. But I didn’t want to let this one go.”
Keeping his Burien investments – including Town Square – in his portfolio, he sold his shares in Urban Partners and many other investments to his partners in the development company, Paul Keller and Matt Burton.
“I stayed loyal to Burien,” he added. “It’s a great community.”
In the meantime, Urban Partners, with Rosenfeld no longer a principal, has continued with its other investments and development projects, including the Terry Avenue Apartments in downtown Seattle.
Rosenfeld formally left Urban Partners last year to join the staff of Los Angeles County Supervisor Mark Ridley-Thomas, a friend of 20 years.
As a senior deputy responsible for economic development, land use, sustainability and transportation issues, he now oversees a $1.7 billion light rail project and the $700 million replacement of hospitals that don’t meet seismic codes, just in Ridley-Thomas’ district.
“Transit-oriented and community development remain my great interest,” he said. “The time to develop new real estate will someday return.”
While his personal interest and connections in the Northwest helped him sell the Burien City Council on Urban Partners at the inception of the Town Square project, Rosenfeld admits the L.A. investors face an uncertain future here.
Urban Partners future role?
“Starwood [Financial Group] has very strong rights” to the condo/retail complex, he conceded. “They bought the [construction] loan –with the FDIC after it closed Corus Bank. They control the note.”
The FDIC sold a 40 percent interest in the bank’s construction loan portfolio to the Starwood group for about 50 cents on the dollar – while Urban Partners was attempting to buy its Town Square construction loan directly from the federal agency.
Now Urban Partners is negotiating with Starwood and the FDIC for a restructuring of its construction loan that reflects current financial conditions. “The market has changed since the project started,” Rosenfeld said. “Nothing is easy today.”
He hopes the negotiations will result in either a partnership or similar relationship between Urban Partners and Starwood for ownership and management of the building, or its outright purchase by Urban Partners. The development company’s other investment partners are also involved in the negotiations.
While Starwood and the FDIC own the note on the construction loan for the condo/retail complex, “Urban Partners knows Burien and the project better than anyone else,” Rosenfeld said. “It would be hard for Starwood to focus adequately on this one project in the Corus portfolio,” especially since many of their projects are in the Sunbelt.
With these factors in mind, he speculated that Starwood might seek a partnership or joint management role with Urban Partners for the Town Square building. â€œUrban Partners has credibility [in Burien]. No one can do a better job for Starwood, or for the community.
“Let’s each bring our strengths to this and get the project sold out. Sell the condos with pending buyers and then sell the rest.” Six condos closed last year, with serious interest from buyers in 34 others despite the fact the sales can’t be closed at this time.
Land for Sale
For now, Urban Partners still owns the three remaining parcels of land on the northern half of the Town Square site. But the group recently listed two of the undeveloped parcels for sale with a commercial broker “to test market interest,” according to Rosenfeld.
The largest parcel, located south of SW 150th St. and east of 6th Ave. SW, is listed for $1.8 million. Immediately beyond the condo/retail complex, this land – originally designated for phase two development of the project – was occupied by the Burien/Interim Arts Space last year.
A vacant half block south of SW 150th St. and west of 6th Ave. SW is listed for $330,000.
At this time, Urban Partners shows no indication that it would let go of the third large undeveloped parcel it owns in Town Square, located south of SW 150th St. and west of 4th Ave. SW, still occupied by the old city hall building.
A proposal for construction of a 10-screen cinema on that site is under study. Yet nothing is carved in stone for Urban Partners, either the parcels it might sell to the right buyer, or the future use of each parcel.
All Options Considered
“We’re looking at all choices,” Rosenfeld said. In the future, Urban Partners could end up developing mixed-income housing or a medical office building or a hotel on the remaining parcels. “All are possibilities. It’s a matter of time and economic recovery.”
Any new buyer of vacant land in Town Square will be obligated, legally, to conform to the original development agreement that Urban Partners signed with the city, according to Dick Loman, Burien’s economic development manager.
City Manager Mike Martin noted last month that Burien â€œhas no money investedâ€ in the private development components of the Town Square, “so the city will not lose any money” if Urban Partners is unable to continue and new investors don’t move in to complete the project.
Rosenfeld remains optimistic. “I don’t know what will happen in the future, but, with our long history here – my family has been active in business in Burien for 47 years – we have made commitments. We set the bar high. Eventually phases two and three will be built.”
Although he provided input to the original Burien City Council when a town square was first discussed, as far back as 1995, “I had no idea I would bid on the site someday, let alone build on it. We are very proud of what we have done together.”
Town Square today – the King County Library/Burien City Hall building, the condo/retail complex and the park between them – is “recognized around the country as a textbook example of first-tier suburban revitalization,” he said.
“It took a lot of determination, and it happened because of the dynamic intervention of the city ten years ago. When we started, parking spaces along [SW] 152nd [St.] were empty after five o’clock.
“Now, with new restaurants and businesses on the street, it’s busy well into the evening,” Rosenfeld added. “We have changed Burien significantly – for the good. Nothing worthwhile is easy, indeed.”
- Is Town Square’s Urban Partners Becoming A “Silent Partner” To Burien?
- What Is Urban Partners Planning To Do With Burien Town Square?
- Here’s Why Burien Town Square Sits Vacant Less Than A Year After Opening
- 10-Screen Multiplex Theater May Be Built At Old City Hall Location
- Cinema Reps Make Their Pitch To Burien City Council
- Will Condo Prices Be Lowered Now That Burien Town Square’s Lender’s Assets Have Been Sold?
- Are Reports Of The Demise Of Burien’s Town Square True? Take Our Poll
- Over 1,000 Witness Burien Town Square Grand Opening