Short on cash, big projects face big obstacles

A deal to buy and preserve as affordable housing the 70-unit Quay Bainbridge Apartments may be dead, following a low appraisal. - Brad Camp/File Photo
A deal to buy and preserve as affordable housing the 70-unit Quay Bainbridge Apartments may be dead, following a low appraisal.
— image credit: Brad Camp/File Photo

Streetscape struggles on, but Quay project may be done for.

This week, against the backdrop of a worsening financial situation, two of the city’s biggest projects continued on separate, but equally tricky trajectories.

For those hoping to purchase and preserve as affordable housing the Quay Bainbridge Apartments, word that a long-awaited appraisal came in well below the purchase price may spell the beginning of the end for the deal.

Meanwhile, for those wrestling with the project formerly known as Streetscape – leaders say it’s been altered so much in recent weeks that its former moniker is no longer fitting – the lack of a definitive plan, combined with the late hour at Wednesday’s City Council meeting, was enough to induce hallucinations.

“I just had a vision of Town & Country at High School Road,” said Councilman Kjell Stoknes, as councilors continued to debate the contentious project. “(In the current building) There’s a flea market upstairs and a judo studio downstairs – and 10 years from now another Harbor Square on the site.”

Stoknes was alluding to the fears of some that anchor tenants such as T & C – which is eying expansion – might leave downtown Winslow without movement soon on long-planned infrastructure repairs.

By the end of the night, Stoknes was on the winning side of what many see as a no-win situation, as councilors voted 4-3 – Bill Knobloch, Debbie Vancil and Kim Brackett opposed – to have project manager Chris Wierzbicki bring a design contract for approval at the April 23 council meeting.

If approved, the contract would likely cost the city around $1.3 million to finish design and prepare the project for an early 2009 bid, followed by groundbreaking in the spring.

Under the approved motion, the contract would require Seattle firm Heery International to complete a base-level design of just the needed infrastructure repairs and alternative designs.

Councilwoman Hilary Franz also attached to the motion a list of eight conditions – including proof that the city has the financial capacity to complete the project – that would have to be met before construction could begin.

Though the vote meant the Winslow Way utility repairs will remain on track for now, leaders and community members are as far as ever from consensus. Many are worried about its timing, lack of a firm financing plan and how construction will impact local businesses.

Business owners turned out at recent meetings to support the project, saying it won’t get any cheaper or easier to complete as time moves on.

Wednesday, though, saw a resurgence of opposition to the plan, including from Winslow Way business owners who hadn’t previously voiced their opinions.

“I’m beginning to think it could take me down,” said Susan Lawrence, who owns Heart, a clothing store on Winslow Way. She said that although some business owners support the project, it shouldn’t be assumed that everyone does.

“There are no clear solutions,” she said. “We just don’t have the kind of tangibles we need to go forward with this.”

T & C President Larry Nakata and Virginia Mason Winslow Clinic owner Tom Haggar both reiterated their desire to move ahead. Haggar in particular hoped to dispel the notion that property owners aren’t willing to contribute financially to the project.

“I don’t know where that came from,” he said. “Property owners need to contribute, and they want to.”

Earlier in the night, councilors again were briefed about the city’s uncertain financial footing. If first quarter trends continue through the rest of the year, city revenue could be down as much as $2.5 million from what was projected in the budget.

Slowdowns in real estate and construction have been cited by finance staff as the main cause of the problem.

But some, including City Hall watcher Bob Fortner, are frustrated that the city’s financial woes are being blamed on the weakening economy.

“Administration has known about the city deficit spending for two years as was announced at finance committee by the finance director a week ago,” Fortner said. “For reasons unknown, they simply did not bring that information forward to the council in documents or statements, thus preventing an earlier approach to the rising crescendo of bad news.”

Staff members have said some of the projected shortfall could be offset by not filling current vacancies at City Hall, and by freezing $500,000 in the contingency fund.

And then came news of the Quay, an appraisal for which came back at $9.275 million – about $3.3 million less than affordable-housing advocates agreed to pay for the 70-unit complex.

Contingencies within the contract would allow the city to get out of the deal.

A firm chosen by the city will review the appraisal over the next two weeks at a cost of $1,500.

Should the results of the initial appraisal be deemed inaccurate, the city would order a new appraisal.

Should the results be confirmed, the city group – which includes Seattle’s Lutheran Alliance to Create Housing, the island’s Housing Resources Board and a group of private donors – would have to convince the Quay’s current ownership group to accept a much lower price.

Given the disparity between the agreed purchase price and the appraisal, that doesn’t seem likely, said HRB Executive Director Carl Florea.

“The project is probably on life support,” Florea said.

Deal-brokers said they were surprised by the results of the appraisal, which came in low due to the struggling condominium market.

Quay owners haven’t granted interviews with the press, but have been characterized by deal-brokers as supportive of the preservation plan. That plan was initially sparked last summer by word of a private offer that would likely have converted the Quay to market-rate condos. LATCH Senior Housing Developer Beth Boram said she doesn’t know whether that offer remains on the table, but owners have said they aren’t interested in selling at the appraised price.

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