If Portland-based McMenamins completes its purchase of Tacoma’s Old City Hall, it would form an entertainment complex that would be a first for the company in an urban downtown.
“It’s a new world for us,” said Mike McMenamin, whose company has begun rehabilitating the 100-year-old Elks Temple and has a tentative agreement to lease and then buy Old City Hall. That building, across Commerce Street from the Elks, would feature a 60-room hotel to complement the 46 rooms coming to the Elks Lodge.
In downtown Portland, McMenamins operates a boutique hotel across from its Crystal Ballroom concert venue. The operation in Tacoma would be much larger. Elks and Old City Hall together approach the square footage of some of McMenamins’ other destination properties — but those are on large swaths of rural land.
In Tacoma, the resort buildings are “two verticals. It’s in town. All of a sudden guests can enjoy your property and (have) the whole town at your doorstep,” McMenamin said Tuesday. “It’s incredible.”
The city of Tacoma announced Monday that it had chosen McMenamins out of four proposals to redevelop Old City Hall, at 625 Commerce St. The city bought the historic structure in June for $4 million to prevent it from deteriorating further after years of neglect.
City officials said Tuesday that work on a lease and a development agreement will begin right away. The city hasn’t decided whether to include the building’s final purchase price in this initial lease agreement, said Elly Walkowiak of the city’s economic development department.
“That will have to be discussed,” she said Tuesday. “There’s a variety of different ways to do it. I don’t have an answer until we go through (negotiations).”
It’s unclear whether the city will recoup its investment. McMenamins chief financial officer Chris Longinetti would not put a number on its proposed purchase price, but said the company’s offer would be a combination of cash and public benefit, similar to the company’s agreement with the city of Bothell to renovate the Anderson School, which opened last fall.
Residents of Bothell have free admission to Anderson School’s pool during regular hours, and access to a community room free of charge. Those provisions are in effect for 15 years, Longinetti said.
The tentative agreement between Tacoma and McMenamins envisions the company leasing Old City Hall before buying it. According to the city, that lease could begin in 2016 and continue for three years.
McMenamins could exercise its purchase option sooner, though it’s unlikely a renovated Old City Hall would open sooner. The company does one project at a time. The Elks Lodge is scheduled to open in summer 2017, and only then would the company turn its focus to Old City Hall. The city news release estimated an opening in fall of 2019.
Other developers who expressed interest in Old City Hall said they’d finish their projects earlier. Grace Pleasants and her investment partners also planned a hotel that would open by July 2018. Daniels Real Estate of Seattle proposed office space that would be open by February 2019.
Walkowiak said city staff deliberated seriously about whether to choose a company besides McMenamins in order to diversify private investment in Tacoma.
“That did enter our discussions so much,” she said. Ultimately, McMenamins extensive track record in restoring historic buildings won out. Walkowiak cited the company’s 18 other properties that are on the National Register of Historic Places, and McMenamins three decades in business.
However, the city intends to keep working closely with Daniels Real Estate to “matchmake” the company with other potential historic rehabs, Walkowiak said, though she has no specific projects in mind.
McMenamin said Tuesday that a lease-buy structure would help the company avoid “a huge cash outlay” at a time that it’s just begun an estimated $25 million renovation of the Elks Lodge. The company still would spend money to keep Old City Hall secure and delay further deterioration, he said.
Leasing a resort location isn’t unprecedented for the company. It has long-term leases at the Grand Lodge west of Portland and Hotel Oregon in McMinnville.
Walkowiak said the city plans to set deadlines to ensure work on Old City Hall begins right after the Elks is completed. This is a point of interest to Tacomans because of the six-year lag between McMenamins’ purchase of the Elks building in 2009 and the start of work last month.
Bothell jumped ahead of Tacoma because Bothell owned the Anderson School and made the sale contingent on the company meeting certain deadlines.
The Elks sale, by contrast, was on the private market, so the city had no influence over the timing of the work there. However, it does have those options with Old City Hall.
Walkowiak’s goal is to have draft agreements to the company by Christmas and final versions before the City Council early next year.
“If things go really well, we might be able to go to council (for approval) in January or February,” Walkowiak said.
If everything goes as planned, Old City Hall will have 60 hotel rooms, bars showcasing the jailhouse, clock tower and rooftop greenhouse; a rooftop restaurant; soaking pools; community/private meeting and event spaces; and a gift shop.
Across the street, the Elks Lodge will have approximately 46 hotel rooms, three restaurants, a brewery and a bar under the sidewalk along Broadway, as well as event space and a rooftop garden for use by the kitchen staff. Some of the hotel rooms will be “cabin” style throughout the fifth-floor ballroom, which will be illuminated by a giant skylight and decorated with greenery.
Mike McMenamin said the properties will enhance each other.
“In the Elks, we’ve crammed in rooms wherever we could,” he said, That’s “fun because the Elks is just a complete jumble of craziness, but some of the spaces were hard to deal with. I’m torn between whether that makes it great or a little awkward.
“We can ease some of that with Old City Hall,” McMenamin said. “Old City Hall is an absolute classic.”