Published April 2002

PFD drops efforts
to buy Cadillac site
South-county group looks elsewhere for land; property owner left with ‘condemnation blight’

By Kimberly Hilden
Herald Business Journal Assistant Editor

With concerns over land cost and construction deadlines, the South Snohomish County Public Facilities District has dropped its bid for a former Cadillac dealership and moved its proposed conference center one block east.

Although the move could mean a larger facility and better traffic flow for the district’s project, it has left the property owner, Olympic Capital Group, “with a bad taste in our mouth,” CEO Ron Gregory said.

For about a year, the 5-acre property at 196th Street SW and 40th Avenue W. suffered from “condemnation blight,” he said, “poisoned from the market,” after the PFD announced its intentions to build a conference center on the dealership site.

And in January, a Snohomish County Superior Court judge did rule in favor of the condemnation for public use, but Olympic Capital appealed that ruling, leaving a court date to resolve the purchase price up in the air.

With time of the essence — under state legislation, districts must begin construction by Jan. 1, 2003, to qualify for 0.033 percent on state sales tax revenues — and worries about how much the Cadillac site could end up costing, the south county PFD began searching for other alternatives. On March 11, the Lynnwood City Council passed an ordinance that ended the condemnation procedure on the Cadillac site.

“The difference was a couple of million dollars — pretty significant dollars — and we didn’t want to take the chance that it was going to cost us that kind of money,” PFD Chairman Mike Echelbarger said.

The district had offered $6.2 million to Olympic Capital — a price Gregory said wouldn’t have covered Olympic Capital’s net investment cost.

Instead, the PFD, which already has purchased the 12-acre Alderwood Village site at 196th Street SW and 36th Avenue SW and is closing a deal with an adjacent veterinary clinic, has begun looking at other nearby properties.

In March, the PFD made preliminary contacts with owners of Bucky’s Muffler and Video Only off of 196th Street SW as well as the Adicott Building and a smaller building to the north that houses a finger-nail service, among others, city Finance Director Mike Bailey said.

Together, those land parcels equal about two acres and will be “significantly cheaper” than the Cadillac site, Echelbarger said. With that in mind, the PFD is planning for a larger conference center.

The original proposal outlined a 35,000-square-foot conference center that could serve as many as 950 people in an auditorium setting and 575 to 860 for single-event banquets.

Under the new proposal, the conference center would be 50,000 square feet, Echelbarger said, with most of the extra square footage going toward exhibit space — space that will open the venue to a greater variety of events.

Besides offering more exhibit space, the new proposal would allow for better traffic flow, with conference attendees using 36th Avenue W., which is adjacent to Interstate 5, to enter and exit the site premises, he said.

The new proposal remains within the PFD’s project budget of about $32 million, money that will come solely from existing city and county hotel/motel taxes and the sales-tax rebate from the south county PFD as well as the Snohomish County PFD.

Construction on the project, which is projected to bring in $9 million a year in economic benefits, is still expected to begin this year and be completed in fall 2004, Echelbarger said.

Long before the first hammer is struck, however, developer Gregory will be testing the market for tenants — as well as for other opportunities — for the Cadillac property.

Gregory, who more than a year ago stepped down as a member of the PFD to prevent any conflict-of-interest issues — even before the PFD expressed interest in the Cadillac site — had until recently envisioned developing a two-building office/retail complex on the site.

Tentatively named Olympic Center, the project would have included a pedestrian-friendly outdoor plaza, a 2,000-stall parking structure, 460,000 square feet of leasable space and a conference center, Gregory said.

Olympic Capital and the PFD even held talks concerning a possible public/private partnership. But talks went nowhere, he said.

In regard to those talks, the construction deadline weighed heavily on the PFD, Echelbarger said.

“We got concerned that if we put all our eggs in one floor of a 15-story building, what’s to assure us that the building was going to get started by 1/1/03?” he said.

That was last summer. Since then, the office market has cooled along with the economy, and Olympic Center’s fate is uncertain.

“We will be reviewing all of our options, including (Olympic Center),” Gregory said. “It will be market driven, whatever we do.”

Other South Snohomish County PFD developments:
n Peter Lieurance, formerly the assistant to the mayor of Lynnwood, has been named Interim Executive Director of the conference center. Lieurance resigned from the mayor’s office in March to take the post, and he already has established an office at Alderwood Village.

n The PFD has put together an advisory committee of association executives and meeting planners who have volunteered to serve as technical advisers. The committee includes: Donna Cameron, Melby, Cameron and Hull, Edmonds; Phillip Wayt, Washington Beer and Wine Wholesale Association, Olympia; Megan Matthias, Meetings and Member Services of the Washington Public Utilities District Association, Seattle; Russell Nickel, Washington Association of School Business Officials, Seattle; Sandra Bertlesen, Washington Veterinary Medical Association, Bellevue; Susan Scott, Independent Insurance Agents and Brokers of Washington, Bellevue; Jan Larson, Washington State Medical Association, Seattle; and Tracy White, Washington State Society of CPAs, Bellevue.

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