City Extends Time For Urban Partners To Start Next Town Square Development
Urban Partners will inform Burien by early next year about its plans for a “marketable” new development at the city’s Town Square.
Construction by Urban Partners of a second multi-use Town Square facility was to begin by mid-July – two years after the private developer’s condominium/retail complex was certified for occupancy.
Since then, however, the current recession has frozen the condo housing market – and due to circumstances beyond its control, Urban Partners no longer owns its first Town Square building.
ST Residential, which now owns the six-story building, has yet to sell a condo or lease ground-level retail space.
Urban Partners asked the city in June for an extension of time to break ground on its next Town Square project, Burien Economic Development Manager Dick Loman recently told The B-Town Blog.
After reviewing that request, the city asked Urban Partners “to provide information on what they think will be marketable,” Loman said.
“Urban Partners has agreed to supply this information to the city 45 days after the first sale closes at the Town Square condos, but no later than Jan. 21. Urban Partners will key off ST Residential because that [sale] will be a local market indicator.”
Still owned by Urban Partners for anticipated development are the vacant Town Square parcels north of the condo/retail complex and the King County Library/Burien City Hall building, and a narrow property east of the post office between S. 150th and S. 151st streets.
ST Residential is still penciling out prices for the 118 unsold Town Square condos “that are fair to us and give value to the owners,” First Vice President David Ploger told Burien City Council members Aug. 15.
Those prices are expected to be “more than 35 percent below the original prices” when the seven-story complex opened over two years ago. The new prices may be approximately $120,000 to $420,000, compared to the original $200,000 to almost $700,000.
While ST Residential “looks forward” to its public launch of condo sales, “I can’t guarantee it will happen yet this year,” Ploger told the city council at that time. No mention was made of the building’s 20,000 square feet of vacant retail space.
Just six condos were sold by Urban Partners before sales were placed on hold when the Federal Deposit Insurance Corporation (FDIC) closed Corus Bank of Chicago in September 2009.
Corus Bank had financed construction of the building with a $38.5 million loan in 2007 to Urban Partners, the city’s partner as developer of the private components of the Town Square project.
But the nation’s housing market began to collapse a year later, eight months before the condo/retail complex opened along with the library/city hall building and Town Square Park.
After the FDIC seized the bank’s assets, including Urban Partners’ loan, ST Residential became holder of its residential construction loan portfolio.
ST Residential is comprised of the FDIC, which holds a 60 percent share of that portfolio, and Starwood Capital Group and four other private investors.
Urban Partners eventually transferred ownership of the condo/retail complex to ST Residential – avoiding a trustee’s sale of this property, which was in foreclosure. The FDIC earlier had rejected an offer by Urban Partners to buy back its construction loan.
“We fully expect that once [ST Residential] gets this thing off the ground, they’re going to sell many more units than just one,” Loman continued. “There is a lot of interest in them” and the first sale should result in a “domino effect.”
In the meantime, “the city is limited in what it can do” to assist Urban Partners in moving forward, he said. Burien’s role is “largely speculative at this point, but we’re anxious to do whatever we can.”
And if Urban Partners is still unable to present a phase two development plan by January, the city will probably re-negotiate with them.
Urban Partners “remains committed to our investment in Town Square with a ground up development” in the future, principal Paul Keller told The B-Town Blog earlier this year.
“As the economy continues to heal, we are optimistic that at some point in time we will be able to move forward” with the second phase of private development there.