What’s Next For Burien Town Square? Don’t Count On A Multiplex Cinema
Urban Partners no longer owns the largely unoccupied six-story condominium/retail complex it built as the first private development in Burien’s Town Square.
And the clock continues ticking toward the deadline for Urban Partners to begin construction of its next Town Square project.
It appears, however, that a 10-screen multiplex cinema will not be this project – and that one may never be built at Town Square.
City Manager Mike Martin told The B-Town Blog this week that Paul Keller, managing partner of Urban Partners, implied the proposed cinema complex may be stalled.
Keller reportedly said this while he was in Burien on Nov. 12.
According to Martin, Keller indicated that development costs are significantly higher than earlier estimated, while additional funding for such a project is harder to obtain at this time.
So what happens at Town Square next? It appears that no one knows – or, if they do, they’re not talking.
Neither Keller nor Frank Rimkus, president and CEO of Los Angeles-based Galaxy Theaters, have returned calls from The B-Town Blog.
Last November, Rimkus presented a proposal to Burien council members to build with Urban Partners a Town Square multiplex cinema.
Urban Partners’ original plan, agreed to by the city in 2005, was for construction of a second condo/retail complex as phase two of the private development component of Town Square.
The development agreement between Burien and Urban Partners also required the city’s private partner to have its second project underway no later than two years after completion of the first.
A certificate of occupancy for the condo/retail complex was issued in July 2009.
Urban Partners owns the vacant parcels east of that property and the library/city hall, immediately west of SW 150th St. It has submitted no plans for the development of either parcel to city staff.
Under the development agreement, Burien could buy back those parcels for 90 percent of what Urban Partners paid for them if a second project has not been started by the deadline.
But, said Martin, “at this point the city has no intention of triggering [the buy-back] provision … we know with a great deal of certainty they will not be building condos there in the next couple of years.
“The reality is that nobody is building big projects right now. They just aren’t. It would be foolish to start a major project right now.”
Noting that Urban Partners “just got caught up in a bad economy,” he added the city is “willing to work with them on alternatives.
“We want them to be ready, not too soon and not too late,” when the economy begins to recover. “What is smart now is to be planning what comes next.”
A negotiated alternative might include a realistic time extension for Urban Partners to begin construction of its phase two development, with the city receiving certain benefits in return.
The proposal by Urban Partners/Galaxy Theaters for a multiplex cinema, as an alternative to another condo/retail complex, suggested building it at the southwest corner of S 150th St. and 4th Ave. SW.
Rimkus estimated it would bring 400,000 movie-goers – most of them from the area between West Seattle and Federal Way west of Interstate 5 – to downtown Burien annually.
Some retail space was to be included in the cinema complex.
Urban Partners as Manager?
On Oct. 29, Urban Partners transferred title of its Town Square building to ST Residential rather than going through a foreclosure sale or filing bankruptcy in an attempt to retain ownership of this property.
ST Residential announced at the time that Urban Partners would be manager of the building because of its history with Town Square and the city.
But even this may not be a sure thing.
The Federal Deposit Insurance Corporation (FDIC) holds a 60 percent in ST Residential. Because public funds are involved in this investment group, a request for proposals for a permanent manager of the condo/retail complex may be a legal requirement.
Although Urban Partners likely would submit a proposal – with an inside track given its history with the project – there is no guarantee the development group would win the contract.
Urban Partners financed construction of the private Town Square development with a $38.5 million construction loan from Corus Bank of Chicago.
But the bank, a major construction lender, was closed and its assets seized by the FDIC in September 2009, just three months after the building opened.
ST Residential – an investment group formed by the FDIC, Starwood Capital Group and four other private investors – acquired Urban Partners’ Town Square project loan.
With negotiations between Urban Partners and ST Residential – initiated shortly after the failure of Corus Bank – moving slowly, a legal notice of foreclosure was filed on July 26.
If Urban Partners did not make a past-due payment of $3.5 million by Sept. 1, according to that notice, the Town Square complex would go into foreclosure.
Six condos sold last year were not impacted.
Peter Marino, a spokesman for ST Residential, said this week the investment group is “in deep analysis mode right now since we got the property a few weeks ago. We are getting our arms around it and we will be making decisions on a variety of issues in the weeks and months ahead.”
Those decisions may include how much to reduce condo prices, if at all, and what new retail leasing rates should be so sales can resume and the building can start filling up.
No new sales or leasing activity is expected to begin until mid-spring at the earliest.