Last Friday, Mayor Ed Murray announced that an agreement had been reached to transfer the troubled Civic Square project over from Triad Development to Bosa Development. The details are pretty interesting.
You could make a good argument that the project has been cursed for many years — or perhaps the curse is on Triad. In either case, it’s worth a quick recap of the project’s history to understand why there has been a vacant lot downtown for over a decade.
In 2005 the old Public Safety Building at 4th and Cherry (just across 4th Ave from City Hall) was torn down, and the city set out to sell the parcel for redevelopment. In 2007, it struck an agreement with Triad Development, and in 2009 the city approved the plan: a 43-story skyscraper and a 3-story adjacent building, with 593,000 square feet of office space, 31,000 feet of retail space, 136 residential units, 600 underground parking spaces and over 30,000 square feet of open plaza space.
Then the recession hit with full force, and Triad’s financing dried up. The city was very understanding, and extended its permits on the project out to 2015. But in the ensuing years, Triad never managed to pull together enough financing to make the project go.
In the meantime, the Tenants Union sued Triad on behalf of a number of low-income tenants. And last year, an executive at Triad Development apparently approached City Council candidate and former Tenants Union head Jon Grant with an offer to withdraw PAC advertising against him if he would help get the Tenants Union to settle their lawsuit. When that became public, Triad Development became a public pariah and Mayor Murray announced that he wanted Triad to pass the project off to another developer. Triad came up with a new partner, Touchstone, earlier this year, but it also could not find adequate financing for the project in the its originally envisioned form.
Which brings us to Bosa Development. Last week the city, Triad and Bosa all signed a term sheet — a non-binding agreement in principle — on how they would all like to move forward. Triad would sell its entire interest and equity in the Civic Square project to Bosa, at which point Bosa and the City of Seattle are in bed together and Triad is out of the picture. Under the terms of the original agreement, Triad can only execute a transfer such as this with the approval of the city, which gives it an opening not only to find an appropriate suitor but also to renegotiate terms if it desires. For its part, Bosa also knows that both the city and Triad are in a hard spot right now with the project, and that gives it leverage to negotiate a new agreement more to its liking.
The original 2007 agreement between the city and Triad Development is strangely complex. The city sold the land to Triad along with a development agreement, upon completion of which Triad would sell back to the City 36,000 square feet of retail space and the entire public plaza (which was required to cover at least 55% of the surface area of the block). Triad would own the remaining retail space, the office space, and the garage and could lease or sell units as it saw fit. But this approach meant that Triad was acting as a development contractor for the city for part of the project along with its own part. So by the terms of the agreement the city was deeply tied into the permitting and approval process, which departed somewhat from the standard city processes (as happens when the city constructs its own buildings).
According to the term sheet, Bosa and the city have a different plan going forward. First, there will be just a single tower with residential units and street-level retail space; the second building on the site, and all of the office space, are gone. Second, the plaza will be reconfigured, but will still be at least 30,000 square feet. But most important, nothing is getting sold back to the city: Bosa will own all of it, but will grant a permanent public easement for the plaza space — akin to the way most new commercial buildings create “public benefit” space as part of the project.
Bosa will pay the city $16 million for title to the property, and an additional $5.7 million in contributions “in support of affordable housing,” inclusive of Incentive Zoning and MHA payments required by ordinance. As an aside, that means the Bosa will likely choose the “payment” option rather than set aside dedicated residential units as affordable in the property.
This is a dramatically simpler approach to getting the project built. Bosa still must run the gauntlet of permits and approvals for the project and must live up to the agreement on the public plaza, but it’s largely on its own — unlike how Triad was joined at the hip to the city until the project completes.
The simpler structure means that they can move faster too. They aim to turn the term sheet into a real agreement by December 31, with Council approval hopefully following in early January. They hope to close the sale by June 30 of next year (giving Bosa time to get all the financing in place), and Bosa would be required to begin construction by June 30, 2018.
The Mayor has proposed that the $16 million in revenues from the sale should fund the Equitable Development Initiative.
Now, the curse may still not be lifted: three legally binding agreements need to be hammered out in the next two months between the City and Bosa, Triad and Bosa, and the City and Triad (to settle ongoing issues related to the current state of the project). There are all sorts of ways those agreements could go wrong, and since lawyers get paid by the hour, it’s likely to go right down to the wire. Plus, Bosa will still need to line up its financing by the end of June. Then the permits need to be issued and the design needs to be approved. But overall this represents significant progress, and a new approach to developing Civic Square that has a much better chance at success than the old one.
If all goes well, some time in 2020 we may be celebrating the grand opening of the new public plaza across the street from City Hall.