REQUEST FOR INTEREST: AIR RIGHTS FOR SALE TO DEVELOP CLASS A OFFICE ADAPTIVE REUSE OF PARK PLAZA NORTH IN DOWNTOWN TACOMA, WASHINGTON 185,900 SF, 5-STORY MASONRY STRUCTURE (AT 9TH BETWEEN PACIFIC AVENUE AND COMMERCE STREET) IN THE HEART OF THE FINANCIAL DISTRICT ISSUE DATE: JUNE 19, 2017 RESPONSES DUE: SEPTEMBER 29, 2017 1
INVITATION Developers are invited to express their interest to the City of Tacoma, Washington, in purchasing air rights to the Park Plaza North garage and ground-level City-owned retail bays located downtown at 923 Commerce Street to create a high quality development that will contribute to the vitality of the Downtown Core and the Theater District. The City owns three of the six retail spaces and air rights to the entire structure as depicted on Page 3. It is the City s goal to address the need for Class A office space in the Central Business District, which has a vacancy rate of less than 5%, and generate permanent, high wage jobs. The City seeks projects that will rejuvenate Park Plaza North by adding two levels of parking (approximately 200 stalls with potential for the City to purchase a portion) and two levels of Class A office space (about 100,000 square feet for private use). Park Plaza North is a 492-stall, nearly fully leased, five-story concrete parking structure built in 1969. The original garage was designed for two more stories. The building is supported by concrete spread footing foundations and drilled caissons. An existing seismic separation joint extends through the full height of the structure in the transverse direction near its center. Two pedestrian bridges to the west and south connect to the parking facility. STRUCTURAL FEASIBILITY STUDY On November 30, 2016, PCS Structural Solutions (PCS) completed the Park Plaza North Structural Feasibility Study for the City of Tacoma to determine the potential for vertical expansion of an additional four levels and a roof. This report is available at http://cms.cityoftacoma.org/cedd/parkplazanorth/study.pdf. To summarize, PCS analyzed existing foundations, walls and columns from a gravity standpoint by identifying the critical elements of the load path to support two levels of parking and two levels of office/residential use. In their walk-through assessment, they did not observe any significant signs of structural distress, differential settlement or deterioration. The building appears to have remained relatively unchanged since its original construction. They concluded that the existing portion of the structure will require a significant seismic upgrade to conform to the structural intent of the 2015 International Building Code (IBC). PCS proposed one possible overall structural scheme to facilitate vertical expansion. Modifications include strengthening the existing structure (foundations, columns, shear walls), adding a new lateral system (core walls) and closing the existing seismic joint. The new floor/roof should be framed to limit the overall weight of the structure in order to reduce demand on the existing building for both gravity and lateral loading. On March 29, 2017, PCS submitted the Park Plaza North Garage Feasibility Study Cost Estimate prepared by The Robinson Company. Details are available at http://cms.cityoftacoma.org/cedd/parkplazanorth/ CostSummary.pdf and at http://cms.cityoftacoma.org/cedd/ ParkPlazaNorth/CostEstimate.pdf. The scope is based on one potential overall structural scheme previously referenced and on similar garage construction/upgrade projects requiring some system replacement. Total expenses in March 2017 dollars are estimated at $19.8 million, excluding soft costs. 2
PARCEL OWNERSHIP Park Plaza North Pacific Avenue & South 9th Street Park Plaza North Commerce Street 3
SITE CONTEXT: DOWNTOWN ACTIVITIES 4
INVESTMENT IN TACOMA Tacoma is experiencing unprecedented growth. Over $1 billion are being invested in development projects in downtown Tacoma and its environs. Private sector investment is surpassing the public sector by a nearly 4:1 ratio. Tacoma s multi-family residential, commercial and industrial landscape is expanding significantly as the market accelerates to attract local, regional, national and international capital. Competition for optimal sites continues to intensify. Investor confidence is soaring in Tacoma s multi-family housing market due to unmet demand for a variety of residential types from new construction to historic building conversions. Approximately 1,700 units are projected to break ground throughout the downtown. These include micro-units without leased parking adjacent to the University of Washington Tacoma YMCA (107 units at South 17th & Market Streets), student/other housing units at the new Town Center south of the University of Washington (600 units at South 21st Street & Jefferson Avenue) and in the Brewery District (210 units at Brewery Lofts, South 23rd & C Streets), transit-oriented developments across from the new Amtrak Station at Freighthouse Square in the Dome District (115 units at the Pierce Transit site 400 block of East 25th Street) and on the Hilltop (247 units at South 11th Street & Martin Luther King Jr. Way) along the future Link light rail expansion, and historic renovation of the Washington Building (165 units at South 11th Street & Pacific Avenue) in the Central Business District. Migration into Tacoma, especially of skilled workers from the Seattle area, offers businesses an opportunity to create new office employment centers for professionals that want to lessen their commutes and enjoy quality time with their families. Tacoma generates and attracts talent. As our community grows, the demand for services increases. Micro-breweries and restaurants are booming in Tacoma. Since 2016, nine Seattle-based restaurant groups have opened or announced plans to locate here because it is a very lucrative market. WildFin s busiest location is at Point Ruston in Tacoma. In addition, the $85 million 4-star Marriott Convention Center hotel and $33 million historic renovation of the McMenamins Elks Lodge are scheduled to break ground in summer 2017. Downtown Tacoma office anchors are growing. State Farm Mutual Insurance recently hired another 200 workers at its 909 A Street regional corporate headquarters. Santa Clara-based Infoblox is attracting talent from the Bay Area to the downtown. Brown & Brown Insurance expanded in and David Evans and Associates, Inc. relocated from Fife to a historic building at 21st Street & Pacific Avenue. Tacoma could attract more office users if quality space were available. Developers are responding to the surging demand for new industrial space within and proximate to the Port of Tacoma, which is located in Foreign Trade Zone #86. An estimated 3.6 million square feet of warehouse/distribution/manufacturing space with 32-foot to 36-foot clear height ceilings has broken ground and is in process of being constructed to accommodate modern requirements. Prologis, DCT Industrial and Industrial Property Trust are constructing projects on sites that have excellent access to Interstate 5 and the future extension of Highway 167. 5
REDEVELOPMENT OPPORTUNITY The City is well experienced in repurposing its garages. In 2010, Pacific Plaza was completed through a public/private partnership between the City and Pacific Plaza Development, LLC. It included redevelopment of the Park Plaza South garage (similar to Park Plaza North), which retrofitted the existing structure to new condition, added two levels of public parking (102 stalls) as well as two floors of Class A office space (67,000 square feet) and converted the City-owned Pacific Avenue frontage to highly marketable retail space (36,000 square feet). Today, the Old Spaghetti Factory, the Attorney General s Office, Bank of the West, and Palladina Health medical clinic occupy the ground level, and other office professionals lease the upper floors. Park Plaza North Pacific Plaza Park Plaza North is planned to support a Class A office development similar to Pacific Plaza in downtown Tacoma. Park Plaza North will involve a different approach than that of Pacific Plaza. The City owns the following retail bays (Parcel Nos. 2009040034, 2009040023, 2009040027) and does not plan to acquire the remaining ground level spaces (ownership map on Page 3). It will provide further information about these properties and facilitate broker/owner introductions upon request. DOWNTOWN REINVESTMENT Substantial reinvestment is underway in the Downtown Core and the Theater District. Most notably, Unico is investing $30 million to renovate the historic Washington Building (1925) into 165 apartments and 5 live-work spaces. The NW College of Art & Design is relocating from Poulsbo, WA to 1126 Pacific Avenue just south of the garage. About $24 million is being invested into restoring the historic integrity, beauty and functionality of the Pantages Theater (1918), which will be completed in 2019. In addition, Pierce Transit is working with Walker Macy and others on Theater District place-making. All of these projects will contribute to the area s vibrancy, which is proximate to offices of major employers, such as State Farm, Columbia Bank and the Multi-Care Health System as well as City Hall, theaters, restaurants and hotels (site context map on Page 4). Park Plaza North will be an integral part of the district s resurgence. As such, the City intends to attract a development that will catalyze and support surrounding development, provide Class A office space and additional parking, enable the creation of high wage jobs, increase the tax base and provide other public benefits, including beautification through public art. 6
PROPERTY INFORMATION OWNER City of Tacoma air rights including 492-stall parking facility constructed in 1969; 3 retail bays. ADDRESS 923 Commerce Street, Tacoma, WA 98402. Easy access to Interstate-705. In Downtown Tacoma within the Theater District and adjacent to restaurant row and entertainment area between South 7th to South 9th Streets. PIERCE COUNTY PARCEL NUMBER City owns 2009040034, 2009040023 and 2009040027 (retail bays) & 2009040042, 2009040126; City has air rights to 2009040041, 2009040036 and 2009040026. Refer to the parcel ownership map on Page 3. BUILDING/LAND AREA 185,900 square foot, 5-story masonry structure constructed in 1969 on 1.11 acres (48,500 square feet); 485 feet of frontage on Pacific Avenue & Commerce Street x 100 feet on 9th St. ZONING HISTORIC STATUS LAND USE ADJACENT LAND USE DCC Downtown Commercial Core. Maximum building height of 400 feet. N/A. Adjacent to the Old City Hall Historic District. Downtown Mixed Use Center. North: Frost Park, restaurant/entertainment uses and apartments. South: Professional office buildings and the NW College of Art & Design. East: Restaurants, retail shops, offices of State Farm s regional claims center and True Blue s headquarters, restoration of the Washington Building into apartments. PARKING CONCURRENCY/SEPA UTILITIES WALK SCORE PUBLIC TRANSIT POTENTIAL INCENTIVES West: Pantages Theater, Broadway Center, Pierce Transit Theater Sq., Pierce County, City Hall. Exempt from parking requirements depending on use; Developers to build their own parking. Within North Downtown Subarea, which has a completed Planned Action EIS. Concurrency test required. Refer to http://www.cityoftacoma.org/cms/one.aspx?portalld=169&pageld=15747. Utilities at site. 95 out of 100 (Walker s Paradise). Daily errands do not require a vehicle. Hub of Pierce Transit (local bus service) and Sound Transit (commuter bus service to Seattle and Olympia). Within one block of Link light rail. No impact fees. New Markets Tax Credits. City of Tacoma B&O tax exemption for qualified jobs. PLAN: http://cms.cityoftacoma.org/planning/north%20downtown%20subarea/north%20downtown%20subarea%20plan%20(10-14-14)/pdf 7
CITY INVESTMENT The City of Tacoma owns the air rights for the parking structure and several retail bays. The August 2011 Meng Analysis: Facility Condition of Municipal Parking Facilities report estimated the backlog of maintenance and repair for Park Plaza North was approximately $3.7 million. It included structural systems but excluded architectural, mechanical and electrical work. The study concluded that only minor repairs are needed. The floor topping systems should be replaced and three elevators upgraded. Since 2011, the City has invested approximately $1 million into LED lighting, resurfacing/restriping, elevator repairs and tenant improvements. On June 7, 2017, Kidder Mathews appraised the fee simple estate of the air rights at $1.2 million. The City intends to retain the public parking structure and requires Developers to pay fair market value for the air rights and any City-owned retail bays acquired. Developers may propose to offset the value of the City-owned property by providing an equivalent benefit (e.g. completing deferred maintenance and addressing structural system upgrades). Developers would need to negotiate directly with owners of the ground-level properties the City does not own to purchase these private properties or secure easements. STRUCTURAL FEASIBILITY STUDY PRESENTATION AND PROPERTY TOUR In order for Developers to gain firsthand knowledge about this unique development opportunity, the City s consultant will present the Park Plaza North Structural Feasibility Study and provide a tour of the property on July 12, 2017. The presentation will take place at 10:00 a.m. in the Visibility Center, Room 900 of the Tacoma Municipal Building at 747 Market Street. Subsequently, the first tour will occur from 11:00 a.m. 12 noon, and the second tour, from 12:30 p.m. 1:30 p.m. Tours will start at 923 Commerce Street, a 5-minute walk from the Tacoma Municipal Building. Attendees must sign an indemnity form, which will be provided on site at the time of the tour, prior to entering Park Plaza North. Also, tour participants will be required to wear hard hats, which they may bring or borrow from the City. If you are interested in the tour, please RSVP Elly Walkowiak, Business Development Manager, City of Tacoma at ewalkowiak@cityoftacoma.org or (253) 591-5209 by July 7, 2017. Participating in the tour is voluntary. Developers may submit responses to this Request for Interest without taking the tour. Park Plaza North Pacific Avenue Park Plaza North Commerce Street 8
SUBMITTAL INFORMATION Developers interested in the property are requested to submit a Letter of Interest describing: 1. The overall development concept for the Project, including but not limited to the type of use (e.g. mixed use, office, retail, parking), estimated amount of space designated for each use, number of parking stalls by type (e.g. standard, compact), public benefits the Developer would be willing to commit to providing, and additional information that responds to the City s goal stated on Page 2 and intent on Page 6 of this RFI. Include a site plan, project rendering and building layout to scale. 2. An overview of the Development Team s qualifications and Project roles as well as other relevant experience in conducting successful complex building renovations and structural additions that contributed permanent, full-time livable wage jobs and vitality to the community. 3. The proposed capital investment and financing plan, including sources and when funds are anticipated to be received. Indicate the proposed Purchase Price or alternative equivalent value for air rights and desired City-owned retail bays. Financial references will be requested if selected to proceed further. 4. The anticipated schedule of key milestones, such as securing financing, acquiring the air rights, procuring entitlements, beginning and completing restoration/expansion and obtaining a Certificate of Occupancy. 5. Preliminary deal terms and other items that are important to the Developer (e.g. permit process assistance). General Conditions: Information provided to the City is subject to the Washington Public Records Act. It should be considered public information and available for review upon request. Provide seven (7) hard copies and one electronic copy by 5 p.m. Pacific Time on September 29, 2017 to: Elly Walkowiak, Business Development Manager City of Tacoma Community & Economic Development Department 747 Market Street, Room 900 Tacoma, WA 98402 Questions related to this Request for Interest (RFI) shall be directed to Elly Walkowiak at ewalkowiak@cityoftacoma.org or by calling (253) 591-5209. 9
EVALUATION PROCESS The City intends to evaluate all responses to this Request for Interest (RFI) within 30 days of the submittal deadline. Developers must commit to offering the Fair Market Value or alternative equivalent benefit (e.g. public development improvements) in their proposals. Other selection criteria will include proposal quality, development team experience and qualifications, financing strategy, community cost/benefit and timeliness. During the evaluation period, the City may request presentations, conduct interviews and seek additional information from respondents. Upon completion, the City may select a Development Team, enter into a Development Agreement based on submittals received and without added process, or elect not to proceed further. DOWNTOWN ADVANTAGE Across the U.S., companies continue to locate in and relocate to downtowns. Park Plaza North in downtown Tacoma can empower businesses to meet six core values: (1) attract and retain talented workers, (2) build brand identity and company culture, (3) support creative collaboration, (4) be closer to customers and business partners, (5) centralize operations and (6) encourage triple bottom-line business outcomes. Park Plaza North can respond to the increasing demand for quality office space in the heart of the city surrounded by numerous amenities. ABOUT TACOMA Tacoma, Washington is located in the Puget Sound region in a metropolitan area of more than 3.4 million people. It is located approximately 34 miles southwest of Seattle, 11 miles northeast of Joint Base Lewis-McChord (third largest military installation in the U.S.) and 31 miles northeast of the state capital of Olympia. Our progressive international city (third largest in the state) with its 206,100 residents serves as the center of commerce for the South Sound. Tacoma s key employment sectors include finance & insurance, information technology, education, health care, business & professional services, trade & logistics and government. Regionally, aerospace, cybersecurity and clean technology continue to grow. Major downtown employers include State Farm Mutual Insurance, True Blue, Columbia Bank, Infoblox, MultiCare Health System, Franciscan Health System, DaVita, Sound Physicians and Regence BlueShield. City, County, State and Federal government offices as well as educational service providers, such as the University of Washington Tacoma, comprise other key employers of the downtown economy. 10