What’s Next For Burien Town Square? Don’t Count On A Multiplex Cinema


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by Ralph Nichols

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.

Development Agreement
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.

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Comments

8 Responses to “What’s Next For Burien Town Square? Don’t Count On A Multiplex Cinema”
  1. Stuart Jenner says:

    “no new sales until spring” is really unfortunate.

    The Seattle Times had a story about ways the City of Seattle was able to leverage its housing levy as well as some other sources of funding to facilitate sales of condo development that was priced too high. Maybe this creativity is a model for Burien that differs from the typical “let’s have an auction” usually used for busted housing developments.

    http://seattletimes.nwsource.com/html/localnews/2013461139_housing18m.html

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  2. Ralph Nichols says:

    Once again Mr. Jenner has fired from the hip – and missed . The record clearly indicates:
    1. The Town Square condo/retail complex is not a “busted housing development.”
    2. It is not, nor has it ever been, the property of the city of Burien.
    3. And it is no longer owned by private developer Urban Partners, which built it.
    4. It is now the property of an investment group – ST Residential – comprised of the FDIC and private investors.
    5. This is because Corus Bank of Chicago, which held Urban Partners’ construction loan, failed in 2009 – after the Town Square building was completed.
    6. The FDIC seized the bank’s construction loan portfolio – then sold a 40 percent interest to these investors.
    7. At that point, Urban Partners, through no fault of its own, lost financial control of its Town Square building.
    8. Urban Partners tried to buy back its construction loan from the FDIC and negotiate new financing terms with ST Residential. Both efforts failed.
    9. Consequently, the building, while still owned by Urban Partners, went into foreclosure. That action was initiated by ST Residential.
    10. Prior to a foreclosure sale – which was about to proceed as the result of the foreclosure action – Urban Partners transferred title of the building to ST Residential. 11. ST Residential than named Urban Partners manager of the property.
    12. Neither Burien nor Urban Partners wanted such a sale or viewed it as a practical solution to the stalemate involving the property. But both the city and the developer were powerless to stop it – short of the transfer of title.
    13. It will now take ST Residential time to assess the local housing market, re-price the condos as well as the retail space accordingly, then offer the condos for sale again – in what remains a poor housing market. This process is expected to take until at least spring. This is the cause of the delay.
    This – just as baseball’s infield fly rule – can be understood through attention to detail.

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  3. Liljo says:

    Why does Burein need a 10-plex theater anyway? Isn’t that just a little overkill for a city of our size? A 4-plex would be nice however…

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  4. Rainycity says:

    Why does Burien need ANOTHER empty building?..*lol*
    I think maybe this urban development group should maybe go f*#k up someone else`s town and make a laughing stock of it.
    We had our fun but now I think it may be best to let the “suburban arrested development” group go. As in elsewhere.
    Who wants to look into this in any more detail anyways? The more we know about this whole fiasco the more pissed people get.

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  5. TcB says:

    It’s getting near spring so let’s revisit this one again! Fun! Btw have you checked the size of the Galaxy Theaters 8 in Gig Harbor or elsewhere and compared it to the property size next to the library? It doesn’t seem to fit, unless they make it multiple stories, which would be a huge building and way out of proportion. 4 theaters would fit nicely, as I’ve said all along. Meh, anyway, I think it’s probably dead Jim.

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  6. curtis mcbride III says:

    we acquired one unit and put down $8,000 on january 30, 2009. And on May 22, 2010 we decided to rescind hoping that we’ll get our money back. But up to now, it’s already March 2011, we’re still waiting and waiting. Everytime we go see Tracy she always tell us she’s not aware of new developments. So we’re wondering when???? We’re also have some concerns and needs of our money due to these difficult times, with thoughts and process in do, we’ve been understanding, please respond.

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    • TcB says:

      Was that earnest money for the condo, then you pulled out of the sale? Don’t know if that’s coming back.

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      • TAY says:

        Check your contract, most where for 2yrs. If yours has expired, you should legaly be able to ask and get your earnst money back because they did not complete the sale within that 2yr time period. I had read earlier that one lady filed a law suit to get her earnst money back but I have’nt seen anything resulting from that law suit. Of course, like everything else, when big buisness wants their money, you better come up with it asap but when you want your money back it could take months or even years before they,ll pay you back. The only other option is to wait until they finally start selling the units again and the sale price you agreed on should be greatly reduced. Good luck.

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