What to do with $25 million in tax credits?
Council now wants riverfront development update
EVERETT - The city’s revelation that it can’t find a suitor for millions of federal dollars prompted council members to ask for a full update on the riverfront development project. That project was where the money was supposed to go.
Everett has access to $25 million in federal tax credits it planned on handing to the developer of the riverfront development project. When that fell through, it switched gears thinking it could put the money toward the planned Marriott Courtyard hotel at Wall Street and Colby Avenue, which the developer couldn’t make work. Everett then pitched the money to any developer willing to build a mixed-use high rise near Everett Station, which flopped.
Now the city has a September deadline to disburse the $25 million in federal new markets tax credit dollars or it risks losing any shot of applying for money in the future, city attorney Tim Benedict told the council last week. Everett wants to be in a position to apply for future money to put toward the riverfront project.
The city now plans to look for projects statewide to disburse the money as long as the U.S. Treasury Department allows it. The Treasury vetted giving Everett the credits.
Giving away the money is not simple. The pot of cash has to go toward a new commercial development in a federally-designated low-income area of town, which omits most of downtown, Benedict said.
The money is intended to “bring sophisticated developments in areas” developers traditionally wouldn’t build in, Benedict said. Everett got a three-year timeframe to use the credits in 2009.
Everett’s $25 million wasn’t enough for riverfront developers Oliver McMillan of Seattle. Oliver McMillan needed $100 million in capital to build an expansive residential-commercial site at the former Simpson Mill site, Benedict said.
The council hasn’t heard any updates on the riverfront project for months, prompting Councilman Arlan Hatloe to call for a full update on the riverfront project at next week’s meeting.
Hatloe wants to know if the project is a go.
“Is this really going to be a viable project,” Hatloe said. “It’s been 11, 12 years. I don’t buy that there’s no money” for developers to find clients.
Oliver McMillan has a 2017 deadline to kickstart building the project, public works director Dave Davis said.
“Sad,” Hatloe replied to Davis’ information.
The $25 million was not critical to funding Oliver McMillan’s development plans, Benedict said.
Putting tax credits into the hotel project, meanwhile, didn’t pencil out for developers Touchstone Corp., Benedict said. They want to build a Marriott Courtyard hotel at the corner of Wall Street and Colby Avenue, but haven’t found enough financing for it yet. The Marriott hotel is on the “edge” of what the tax credits can be used for, Benedict said.
The hotel project is on track but still seeking funding, Touchstone’s Paul Klansnic said last week. Touchstone may have enough investment capital secured by this fall, Klansnic said. He is the lead manager for the project.
The hotel will be on city property and Touchstone managers regularly have come to City Council asking for time extensions to start the project. Their next deadline is in November. Touchstone doesn’t plan to ask for another extension, Klansnic said.
A plan to sell city land for a mixed-use building near Everett Station also fell through. Nobody applied to a recent request for proposals, Everett Transit director Tom Hingson said.
The agency hoped to sell part of a big parking lot to create transit-oriented development next to Everett Station — basically putting more businesses and residences right near the station.
Everett Transit won’t try asking again, Hingson said.
“The plan is if somebody was interested we would go forward,” Hingson said. “It will remain a parking lot in the foreseeable future.”