Urban Partners Anticipates Imminent Settlement Over Town Square Complex
Despite recent notice of a pending foreclosure action against the condominium/retail complex in Burien Town Square, negotiations between Urban Partners and ST Residential have progressed to the point where a settlement appears imminent.
“We’ve completed our negotiations and the final agreement and various exhibits are being circulated and reviewed now,” Paul Keller, managing partner of Urban Partners, the private developer of Town Square, told the B-Town Blog on Aug. 17.
“I firmly believe that within a couple of weeks, the agreement will be signed,” Keller said. “When I stood before the city council in May, I told them we would see this to fruition. Today I stand by that statement.”
He declined to discuss specifics since the agreement is still under review. “I can only tell you what Urban Partners anticipates will happen.
“Very simply put,” Keller continued, “Urban Partners anticipates its continuing participation in this project through the sale of condominiums and the leasing of ground-floor retail space.”
Urban Partners built the Town Square complex with a $38.5 million construction loan from Corus Bank of Chicago. But the bank was closed and its assets seized by the Federal Deposit Insurance Corporation on Sept. 11, 2009 – three months after the six-story building opened.
The nation’s housing market had collapsed about a year before Corus Bank failed – as the complex was nearing completion and only eight months before it opened in June 2009, along with the new Burien Library/City Hall building and adjacent park.
The FDIC kept a 60 percent interest in the Corus construction-loan portfolio and sold the remaining assets to Starwood Capital Group and four other private investors. Together all parties formed ST Residential, which is holding and renegotiating those commercial loans.
When Keller updated the city council on the progress of negotiations in May, he noted, “The FDIC entity does not lend itself to any quick resolution.” Yet in the meantime, “We have people waiting to close escrow and move into the building, but they’re stymied.”
He added this week, “There are all kinds of internal processes they [ST Residential] have to go through that I’m not privy to and then they have to report back to the FDIC” before resuming discussions with Urban Partners.
ST Residential also has its home office in Chicago and a former employee of Corus Bank, who managed Urban Partners’ Town Square construction loan, has continued to be involved with the developer during the negotiation process.
“That’s who we have had to deal with,” Keller said. “So there’s been a continuity.”
With negotiations between Urban Partners and ST Residential, which were initiated last fall, moving slowly, a legal notice of foreclosure was filed on July 26, stating that if Urban Partners does not pay $3.5 million by Sept. 1 its Town Square complex will go into foreclosure.
Urban Partners still owes approximately $34.8 million on its loan from Corus Bank. Foreclosure would affect the 118 unoccupied condos that have not been sold as well as ground-floor retail space and parking. Six condos sold last year would not be impacted.
Keller noted that the foreclosure action and the $3.5 million payment “are all included in the agreement.”
During negotiations with ST Residential, Urban Partners has attempted to renegotiate down its construction loan so prices of condos and retail space can be reduced to reflect current market rates.
Peter Marino, a spokesman for ST Residential, said in response to an inquiry from The B-Town Blog, “at this point, we are a few weeks away from being able to comment publicly about [the Town Square] property. We will let you know as soon as we have something to say.”
Town Square Cinema Next?
Beyond the anticipated agreement – and resumption of condo and retail-space sales – Keller said Urban Partners is “absolutely” committed to continued involvement in the private development of Town Square.
“Urban Partners has been diligently working with Galaxy Theatres for a transaction that can be advanced and can satisfy all the requirements of the downtown plan.
“I’m cautiously optimistic that very soon I will be able to report back to the Burien City Council and the Burien Economic Development Partnership of fruitful progress on a Galaxy Theatre” for Town Square.
The recent approval of financing for Burien’s Transit-Oriented Development parking garage by Sound Transit and the King County Council “is a big step forward, a critical component,” for the proposed multiplex cinema project, he said.
If built, it would bring a 10-screen multiplex cinema, with an additional stage for community theater and dance, to downtown Burien at the southwest corner of SW 150th St. and 4th Ave. SW where the old city hall building is located.
The parking garage, which would provide needed evening and weekend parking for movie goers, will be built near the northeast corner of SW 150th St. and 4th Ave. SW. Construction is expected to begin in late summer or early fall with completion in about a year.
Council approval would be required for a cinema, since it would represent a significant change in plans from Urban Partners’ current Town Square agreement with the city for development of another condo/retail complex on that site.
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