Olympia council votes to buy isthmus properties for $3.3 million

Staff writerApril 23, 2013 

View of the isthmus in downtown Olympia. (The Olympian file)

STEVE BLOOM — Staff photographer

In a surprise vote, the Olympia City Council voted unanimously Tuesday night to pay an estimated $3.3 million to buy two properties on the downtown isthmus, an area that was the site of a controversial proposal to build two upscale condominium buildings.

The move, which would allow for a new park, came suddenly; the item was a late addition to the council’s agenda. City staff earlier reached a tentative purchase and sale agreement with Capital Shores Investments for the properties at 505 and 529 Fourth Ave. E., which total 2.3 acres. The proposed price is $3.1 million, plus past and current property taxes, for a full estimated price of $3.3 million.

Capital Shores had already signed the agreement, but the council’s vote was necessary to push it forward. All council members attending Tuesday’s meeting voted for it. Council members Karen Rogers and Steve Langer were absent.

Councilwoman Jeannine Roe said “this is really a historical evening.”

But it’s not a done deal. The purchase is contingent on the city receiving $1 million in the next state budget, and the city “receiving favorable results from its environmental assessment of the properties,” according to a city staff report. The agreement gives the city until June 15 to close on the sale.

The deal will also need the approval of a bankruptcy court, said Jerry Reilly, chairman of the Olympia Capitol Park Foundation, a citizens group that has been pushing for an isthmus park. Capital Shores is currently in Chapter 11 bankruptcy proceedings, according to the purchase and sale agreement.

Reilly was optimistic.

“This is the biggest milestone to date,” he said.

He said his foundation hopes to raise $400,000, which could provide funding for acquisition or demolition of the abandoned buildings on the properties – the former Thurston County Department of Health building and the Thurston County Housing Authority building. He said his foundation has raised about $150,000.

The priority, Reilly said, is to acquire the properties, admitting “there’s a lot of uncertainty.” He wasn’t sure what would happen if the state money didn’t come through.

“I’m hopeful that we can add the partnership of the state to this very important project to the city of Olympia,” Mayor Stephen Buxbaum said.

Though Tuesday’s move was sudden, it was not entirely unexpected. Acquiring the parcels has been a priority of the council since at least last year.

That’s when it committed $1.7 million, plus $600,000 in Conservation Futures funding from Thurston County. It has been working with the Olympia Capitol Park Foundation as well as the San Francisco-based nonprofit The Trust for Public Land, Thurston County and state lawmakers.

But the deal does not include another property coveted by the park foundation – the Capitol Center building, a vacant office tower about 120 feet tall that detractors call the mistake by the lake.

The council’s Tuesday action is the latest chapter in a community controversy that dates back almost six years. Triway Enterprises, the Tri Vo-owned development company involved in the Capital Shores project, applied to the city in November 2007 to raise building height limits on the isthmus to allow structures as high as 90 feet.

The developer needed the new height limit to allow its proposal for Larida Passage, two buildings with 141 condominiums, offices, retail and parking.

One building would have been seven stories tall and the other five stories. Opponents said the buildings would block important views of Budd Inlet and the Olympic Mountains. Supporters of the condos said they would generate economic development in downtown.

After a year of community debate, the City Council voted to raise height limits in 2008.

But that sparked a political backlash, and residents voted out the council members who voted to raise height limits. A newly constituted council voted in 2010 to drop height limits to 35 feet.

The developer maintained the property was vested under the old zoning. But nothing happened at the site as the economic downturn deepened.

The property went into foreclosure proceedings a year later, and Capital Shores filed for bankruptcy. That created an opportunity for the city to buy the property, with the help of Thurston County.

And the now the matter is in the hands of the Legislature. The House capital budget includes $386,000 for the project. The Senate version does not provide any money.

“I’m just very hopeful that our House and Senate members will support us in this endeavor in their respective capital budgets and ultimately come up with the amount that we are hoping for,” Roe said.

Matt Batcheldor: 360-704-6869 mbatcheldor@theolympian.com @MattBatcheldor

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