Port of Olympia approves lease and option agreement with downtown developer

The Port of Olympia commission’s first action of the new year was to unanimously approve a ground lease and option agreement for an East Bay parcel with prominent downtown developer Walker John.

John’s previous projects in downtown Olympia include: The Cunningham building at Fourth Avenue and Adams Street Southeast; the Thurston First Bank Building at Franklin Street and Legion Way Southeast; and the Campus Lofts & Townhomes at 12th Avenue and Jefferson Street Southeast.

The vote came after the three-member commission heard from about a dozen people on Monday who raised concerns about sea-level rise and whether the proposed project would block an effort to restore Moxlie Creek, which flows underground much of the way from Watershed Park into the East Bay of Budd Inlet.

Port staff and the commission responded to a number of those concerns before the commission approved the lease and option, citing the importance of urban density, the need for more urban housing, and the need to transform land that has become best known for its perimeter fence.

Commissioner E.J. Zita said the vote “does not foreclose the option of Moxlie Creek estuary restoration.”

The property is between State Avenue and Marine Drive, near East Bay. Developer John plans to bring a mixed-use development to the corner of State Avenue and Jefferson Street, including 87 market-rate rental units, of which nine will be townhomes. Other elements include 8,400 square feet of ground-floor commercial space and a water feature, with a pedestrian path that eventually could connect State Avenue with Marine Drive.

The port also approved an option agreement with John, which allows him to explore development of the remaining property.

Before anything happens on the site, the port, working with the state Department of Ecology, will clean it up.

“I like the potential for this parcel,” said Commissioner Joe Downing about his decision to approve.

“Urban density is an important goal, the land has been industrial or ugly for any number of years, and it’s pretty handsome income for the port,” he said.

The ground lease covers about 64,000 square feet, and is for 50 years with a 30-year option to extend. Under the terms, John initially will pay $1 per square foot, but it will increase 2 percent annually. He also will pay the port 3 percent of his tenants’ gross receipts, but that falls to 2.5 percent if he pursues an environmentally friendly design known as LEED.

Zita acknowledged the importance of urban density and housing, and said she had heard the speakers’ environmental concerns, including about sea-level rise.

“I respect those concerns,” she said, adding that “sea-rise is a problem for the port.”

“The city of Olympia is taking the lead about sea-level rise and we will continue to work with them and use their knowledge and work with their recommendations,” she said.

Mike Reid, the port’s senior manager of business development, said questions about sea-level rise and John’s project will be handled during the city’s building permit process.

Moxlie Creek is “entirely contained” on city property except for about a foot of it on port property, Reid said.

Zita told the audience that for Moxlie Creek to be restored, “we need support from the city of Olympia for that to be a possibility.”

That might be a challenge, said Reid, who said the city “has not expressed the intent or interest to the port about daylighting efforts.” “Daylighting” the creek would mean digging up streets and uncovering the creek.

This story was originally published January 9, 2017 at 11:25 PM with the headline "Port of Olympia approves lease and option agreement with downtown developer."